ISSUED  QUARTERLY 


Vol.  I.  No.  1. 


PRICE,  25  CENTS 


To  tl^e  If^cadei's 


6 


of 


Coit)'s  Fii^ai^cial  SCJ700I 


All  ANSWER 


"m 


^ 


BY 


GEN.    JOHN    BEATTY. 


Entered  accoriHng  to  act  of  Coiiffross,  in  1895,  by  H.  K.  Doiiavin,  Publisher, 
in  the  oHice  of  the  Librarian  of  Cotigress,  at  Washington,  D.  C. 


Mansfield,  Ohio,  Aug.  17,  1895. 

Jllr.  S.  K.  Donaviri,  Columbus,  Ohio  : 

Dear  Sir  —  I  heartilj-  commend  to  the  public  the  clear  and 
excellent  answer  by  Gen.  John  Beattj'  to  "Coin's  Financial 
School."  General  Beatty's  writings  attracted  my  attention 
when  published  in  the  current  newspapers,  and  I  was  much 
pleased  with  them.  Now  that  they  are  published  as  a  whole 
in  pamphlet  form,  I  recommend  the  largest  circulation  that 
can  be  given  to  them.  They  contain,  from  a  business  stand- 
point, full  answers  to  all  the  fallacies  in  "Coin's  Financial 
School,"  and  will  do  much  to  inform  our  people  of  the  im- 
portance and  necessity  of  -maintaining  the  present  standards 
of  value.  Every  one  ought  to  be  familiar  with  the  facts 
stated  in  this  pamphlet,  which  I  regard  as  the  best  presenta- 
tion that  has  been  made  of  the  sound  money  side  of  National 
finances.  Very  truly  yours, 

John  Sherman. 


Hamilton,  O.,  August  24,  1895. 
My  Dear  Donavin  — I  am  in  receipt  of  the  advance  sheets 
of  Gen.  Beatty's  reply  to  "Coin's  Financial  School."  It  is  like 
all  of  Gen.  Beatty's  work,  terse,  vigorous,  interesting  and 
instructive.  I  predict  for  it  a  wide  circulation  with  much 
resulting  good.  Sincerely, 

James  E.  Campbell. 


Treasury  Department,  Office  of  the  Treasurer, 

Washington,  D.  C  ,  Aug.  20,  1895. 

Mr.  S.  K.  Donavin,  Cohonbus,  Ohio: 

Dear  Sir — I  am  in  receipt  of  your  esteemed  recent  favor, 
also  of  the  copy  of  the  vigorous,  sti-aightforward  statistical 
pamphlet  "  An  Answer,"  by  Gen.  John  Beattj',  to  which  you 
especially  invite  the  attention  of  the  readers  of  "  Coin's 
Financial  School." 

The  subject  of  the  financial  question,  which  is  so  generally 
in  the  public  mind,  will  lead  those  who  desire  to  understand 
the  bearing  of  the  currency  as  affecting  the  welfare  of  the 
country  to  investigate  from  every  standpoint  the  efl^ect  of 
maintaining  a  standard  of  values  of  coin,  or  its  representa- 
tives, so  that  the  money  of  the  United  States  shall  go  un- 
challenged as  equal  in  value  to  that  of  any  country  in  the 
world.  Our  continued  prosperity  is  dependent  itpon  a  sound 
unquestioned  currency.  With  your  suggestion  carried  out,  to 
add  the  speeches  of  Secretary  Carlisle  and  others  to  General 
Beatty's  papers,  it  will  make  a  strong  combination  of  facts 
and  figures  that  must  prove  convincing  to  many  who  are 
searching  diligently  on  patriotic  business  lines  to  serve  the 
best  interests  of  the  people  generality. 

Respectfully  yours, 

Daniel  N.  Morgan. 


TO  THE   READERS   OF 

'^Coin's  Financial  School." 


An  Answer 


By 

GEN.  JOHN  BEATTY, 

Of  Columbus,  Ohio. 


#   •     .1  5      J  ">         * 


^     *        O     1  t 


•  •        >  :    I 


PUBLIBHBD   BY  S.   K.    DONAVTN,   OF  COLnilBUS,   OHIO. 

1895. 


.^ftP2P 


«       I         19     4 
a  Ail 


>    «  C     «       I 


MONEY  IN  USE  FROM  ir92  TO  1861. 


^^ 


^^EFORE  entering  upon  the  consideration  of  Mr. 
.^^  Harvey's  book,  permit  me  to  occupy  five  min- 
^^'^^  utes  in  a  review  of  the  monetary  history  of  the 
United  States  from  the  Revolutionary  period  to  the 
beginning  of  the  great  Civil  War. 

The  bimetallic  standard  was  adopted  in  1792,  the 
relative  values  of  the  two  metals  being  fifteen  of  silver 
to  one  of  gold — that  is  to  say,  one  ounce  of  gold  was 
then  esteemed  in  law  and  commerce  the  equivalent  of 
fifteen  ounces  of  silver ;  coins  of  both  metals,  whether 
large  or  small,  were  made  a  legal  tender  in  payment 
of  all  debts. 

When  two  metals  may  be  used  concurrently  as  a 

medium   of  exchange,  both  endowed  with  the  legal 

>^  tender  quality  and  open  to  free  and  unrestricted  coin- 

!  age,  there  is  a  force  affecting  them  as  invariable  in  its 

)j  operation  and  effect  as  the  law  of  gravitation.     It  is 

J  known  as  Gresham's  law,  and  declares  that  bad  money 

^  or  cheap   money  will  always  drive  dearer  or  better 

money  out  of  circulation. 

The  reason  for  this  is  obvious.  If  gold  is  worth 
more  elsewhere  than  here  it  will  be  sent  away  and  sold 
for  the  profit  there  is  in  the  transaction,  and  silver  be- 
ing relatively  the  cheaper  money,  will  remain  to  pay 
debts  and  facilitate  exchanges. 

The  bimetallic  standard,  as  I  have  said,  was  adopted 
in  1792,  but  under  the  operation  of  the  law  referred  to, 
gold  began  to  disappear  in  1805 ;  by  1810  it  had  become 
exceedingly  scarce,  and  before  1820  it  had  wholly 
vanished.  The  country  was  thus  left  with  a  single 
standard,  consisting  mainly  of  the  worn  and  clipped 


i^ftQPOf; 


.4  ANSWER  TO 

coins  of  other  nations  which  for  a  time  were  by  law  a 
legal  tender. 

In  1834  the  ratio  of  one  ounce  of  gold  to  sixteen  of 
silver  was  established  in  order  to  tempt  gold  back 
again,  and  then  silver  became  the  dearer  metal,  and 
it  disappeared,  the  effect  of  the  change  of  ratio  being 
simply  to  substitute  gold  for  silver,  and  continue  the 
single  standard.  From  that  time  (1834)  to  the  begin- 
ning of  the  Civil  War,  the  country  had  practically  but 
one  standard  —  one  measure  of  values,  and  that  was 
gold. 

Bimetallism,  or  the  double  standard,  during  the 
first  half  century  of  our  existence  as  a  nation,  there- 
fore, was  at  best  nothing  more  than  a  legal  fiction,  in- 
operative and  void.  What  we  did  have  in  fact  were 
disturbing  alternations  from  the  single  silver  standard 
to  the  single  gold  standard,  and  this  latter,  as  I  have 
said,  was  the  standard  in  this  country  from  1834  to 
1861,  and  no  living  soul  during  that  period  of  twenty- 
seven  years  ever  objected  to  the  gold  standard,  or  sug- 
gested that  the  silver  standard  would  be  preferable  to 
it,  or  that  any  man  or  class  of  men  could  be  injured  by 
it,  either  in  simultaneous  exchanges  or  in  making  con- 
tracts for  future  payment.  It  was  this  gold  money  our 
Democratic  friends  delighted  to  talk  about  on  the 
stump.  It  was  the  money  used  by  our  banks  as  a 
basis  for  circulation.  It  was  this  standard  by  which 
the  value  of  every  piece  of  our  property  was  measured. 
How  could  it  have  been  otherwise  than  I  have  stated, 
for  from  1792  to  J861  there  had  been  less  than  eight 
million  and  a  half  of  silver  dollars  coined,  and  these 
under  the  operation  of  Gresham's  law  had,  after  1834, 
gone  to  the  melting  pot,  and  thence  to  the  bullion 
buyers  of  other  countries. 

The  suspension  of  specie  payments  occurred  in 
December,  1861,  and  from  that  date  to  January,  1879, 
the  country  had  in  circulation  neither  silver  nor  gold. 
During  this  period  of  eighteen  years  the  value  of  com- 
modities was  measured,  or  guessed  at,  by  an  inconvert- 
ible and  constantly  fluctuating  paper  currency —  a  cur- 
rency composed  of  promises  to  pay  dollars  at  some  indefi- 


"  COIN'S  FINANCIAL  SCHOOL."  5 

nite  period  in  the  future.  These  paper  dollars  were  at 
one  time  thought  to  be  worth  35  per  cent,  of  their  nom- 
inal value ;  at  another  50, 60, 70, 80, 90,  and  finally,  eigh- 
teen years  after  their  first  issue,  they  were  redeemed  in 
gold.  There  was  in  fact  never  a  contract  made  in  this 
country  between  individuals  on  the  bimetallic  or 
double  standard  basis  prior  to  the  passage  of  the  Bland- 
Allison  law  of  1878.  All  we  have  heard,  therefore, 
about  the  "  dollar  of  our  fathers  "  is  idle  chatter  con- 
cerning a  dollar  which  from  1834  to  1879  the  fathers 
never  saw  and  never  even  thought  of  in  connection 
with  their  exchange  of  products,  or  the  promises  they 
made  for  the  future  payment  of  money. 

The  truth  is  the  so-called  "  demonetization  "  of  sil- 
ver in  1873  resulted  practically  from  the  act  of  1834 
changing  the  ratio  of  the  two  metals,  and  from  that  of 
1853  reducing  the  amount  of  pure  silver  in  fractional 
coins,  and  limiting  their  legal  tender  power.  The 
members  of  Congress  who  favored  the  law  of  1853 
openly  avowed  their  intention  to  adopt  and  hold  fast 
to  a  single  standard.*  The  act  of  1873,  which  silver 
men  so  bitterly  denounce,  simply  called  attention  to  a 
fact  that  to  all  intents  and  purposes  had  existed  for 
nearly  half  a  century,  to-wit :  that  the  standard  money 
of  the  United  States  was  gold. 

John  Beatty. 

*  Pages  79-80  Laughlin's  History  of  Bimetallism. 


**  Coin's  Financial  School," 


REVIEW  OF  FIRST  CHAPTER. 


a  BOOK  containing  155  pages,  with  many  so-called 
pictorial  illustrations,  written  by  a  Mr.  W.  H. 
Harvey,  has  been  issued  by  the  Coin  Publishing 
Company  of  Chicago.  It  bears  the  title  of  "  Coins  Fi- 
nancial School,"  and  from  this  one  might  reasonably 
infer  that  it  contained  valuable  facts  with  respect  to 
monetary  matters.  A  thorough  investigation  of  the 
contents,  however,  will  show  that  it  is  full  of  misin- 
formation, half  truths,  whole  falsehoods,  absurd  assump- 
tions, and  empty  but  oracular  utterances. 

The  first  chapter  is,  in  part,  devoted  to  the  money 
unit.  The  Congress  of  the  United  States  in  1792,  the 
author  tells  us,  "  fixed  the  monetary  unit  to  consist  of 
371i  grains  of  pure  silver,  and  provided  for  a  certain 
amount  of  alloy  to  be  mixed  with  it  to  give  it  a  greater 
hardness  and  durability."  Suppose  this  were  true, 
what  does  it  amount  to?  The  act  of  one  congress  is 
no  whit  more  sacred  and  binding  tlian  the  act  of  another 
congress.  Thousands  of  laws  have  been  repealed,  or 
amended,  and  for  f^ood  reasons.  If  the  act  of  April  2, 
1792,  had  remained  in  full  foire  we  shouhl  have  had  no 
gold  money  from  1820  to  18(>0,  and  not  much  silver. 
The  old  copper  cent  containinf;  11  pennyweights  of 
copper  would  liavo  still  been  in  circulation,  and  the 
alloy  for  slandanl  gold  coins  and  standard  silver  coins 
would  have  remained  unchanged. 


8  ANSWER  TO 

As  evidence  that  the  fathers  did  not  regard  the  law 
of  1792  as  a  finality  in  money  matters,  we  find  that  by 
the  act  of  1834  the  gold  dollar,  or  unit,  was  reduced 
from  27  grains  of  standard  gold  to  25 yV  grains;  the 
silver  dollar,  or  unit,  from  416  grains  standard  silver  to 
412^  grains.  By  the  act  of  1849  single  gold  dollars,  or 
units,  were  authorized,  and  by  the  act  of  1853  "  a  coin 
of  gold  of  the  value  of  three  dollars,  or  units,"  was 
coined. 

The  idea  that  any  human  law  must  remain  forever 
unaltered  or  unrepealed  is  not  only  the  veriest  rot,  but, 
if  heeded,  would  be  an  obstruction  to  all  progress. 

The  act  of  1792,  however,  did  not  "fix  the  monetary 
unit  to  consist  of  371^  grains  of  pure  silver,"  etc.  It 
simply  made  a  monetary  unit  of  silver  and  called  it  a 
dollar,  just  as  previously  in  the  same  section  of  the  law, 
gold  coins  were  authorized  of  the  value  of  dollars  or 
units.  Twenty-seven  grains  of  standard  gold  under 
that  act  constituted  a  dollar  or  unit  in  precisely  the 
same  way  that  416  grains  of  standard  silver  made  a 
dollar  or  unit.  The  provision  for  gold  dollars  or  units 
in  the  law  preceded  the  provision  for  silver  dollars  or 
units,  and  men  simply  quibble  over  words  and  trifle 
with  the  good  sense  of  people  when  they  attempt  to 
show  that  the  act  of  1792  made  a  silver  dollar  the  unit 
and  hence  the  dominating  coin  in  the,  original  mon- 
etary scheme  of  the  United  States. 

The  Spanish  milled  dollar  was  the  dollar  best  known 
to  the  people  of  this  country  in  1792,  and  hence  it  was 
that  congress  interjected  into  the  act  of  1792  an  esti- 
mate or  illustration  of  the  value  of  a  dollar  which  all 
could  understand,  by  using  the  words,  "of  the  value  of 
the  Spanish  milled  dollar  as  the  same  is  now  current." 
As  evidence  that  the  law  did  not  intend  to  prefer  silver 
to  gold,  or  to  make  coin  of  the  former  metal  the 
dominating  unit  in  the  measurement  of  values,  I 
quote  from  section  11  of  the  act  fixing  the  ratio  of  gold 
to  silver:  "The  proportional  value  of  gold  to  silver  in 
all  coins  shall  be  as  15  to  1.  That  is  to  say,  every  15 
pounds  of  pure  silver  shall  be  of  equal  value  to  one 
pound  of  pure  gold."     The  dollar  is  the  unit  in  our 


"  COIN'S   FINANCIAL   SCHOOL."  9 

monetary  scheme,  for  a  unit  is  as  indispensible  in 
finance  as  in  mathematics;  but  this  unit  may  be  either 
a  dollar  of  gold  or  a  dollar  of  silver,  and  the  act  of 
1792  so  provided.  , 

Section  20  of  that  act  declares  "  that  the  money  of 
account  in  the  United  States  shall  be  expressed  in 
dollars  or  units,  dismes  or  tenths,  cents  or  hundredths, 
mills  or  thousandths,"  etc.  But  it  does  not  say  that 
the  dollars  and  "dismes"  which  constitute  the  "money  of 
account"  shall  have  reference  only  to  dollars  and 
"  dismes  "  of  silver. 

Hamilton,  in  the  report  on  vrhich  the  law  of  1792 
was  founded,  said,  "the  unit  in  the  coins  of  the  United 
States  ought  to  correspond  with  24  grains  and  three- 
fourths  of  a  grain  of  pure  gold  and  with  371  grains  and 
one-fourth  of  a  grain  of  pure  silver  each,  answering  to 
a  dollar  in  the  money  of  account."  Jefferson  insisted 
upon  the  adoption  of  the  name  dollar  for  the  unit 
because  this  name  and  the  value  attached  to  it  had 
become  familiar  to  the  people  of  the  United  States 
through  the  use  of  the  Spanish  milled  dollar. 

By  the  act  of  February  9,  1793,  gold  coins  of  Great 
Britain  and  Portugal  were  made  a  legal  tender  at  the 
rate  of  100  cents  for  every  27  grains.  It  will  be 
observed  here  that  the  value  of  gold  was  counted  from 
the  copper  cent  and  not  from  the  silver  dollar. 
When  Mr.  Harvey  therefore  affirms  (page  7)  that  "gold 
was  made  money,  but  its  value  was  counted  from  these 
silver  units  or  dollars,"  he  gives  expression  to  an  ab- 
surdity, and  when  he  prolongs  this  idiotic  drivel 
through  ten  or  twelve  pages,  he  makes  even  a  vigorous 
man  weary. 

Mr.  Harvey  devotes  five  pages  of  the  first  chapter 
of  his  book  to  a  rambling  discourse  on  what  lie  calls 
"the  crime  of  1873."  This  alleged  crime  was  perpe- 
trated in  a  revision  and  amendment  of  the  coinage  laws 
of  the  United  States.  The  act  of  which  he  complains  is 
popularly  but  erroneously  known  as  the  act  demonetiz- 
ing silver.  The  minor  coins  by  this  law  were  continued 
with  all  the  legal  tender  power  they  had  possessed 
since  1853.     No  provision,  however,  was  made  lor  tlie 


10  ANSWER   TO 

coinage  of  silver  dollars,  for  the  simple  reason  that 
they  would  then  have  been  worth  three  or  four  per  cent, 
more  as  bullion  than  as  coin,  and  if  coined  they  would 
have  gone  at  once  to  the  melting  pot  and  disappeared. 
In  fact,  at  the  time,  there  were  no  United  States  silver 
dollars  in  circulation,  and  had  been  none  since  about 
1834.  It  would  seem  to  be  about  as  difficult  to  demon- 
etize a  coin  which  did  not  exist  as  to  kill  a  dog  already 
dead. 

Notwithstanding  all  Mr.  Harvey  says  to  the  contrary^ 
the  law  to  which  he  objects  was  deliberately  considered. 
The  bill  went  through  both  branches  of  congress,  not 
in  haste,  but  after  much  discussion.  The  secretary  of 
the  treasury  called  attention  to  it  in  1870,  1871  and 
1872,  and  the  printed  discussions  of  the  bill  cover  140 
pages  of  The  Congressional  Globe.  When  Mr.  Harvey 
affirms  that  "the  newspapers  on  the  morning  of  February 
13,  1873,  and  at  no  time  in  the  vicinity  of  that  period, 
had  any  account  of  the  change,"  he  accuses  them  of 
gross  lack  of  vigilance  and  enterprise;  and  if  Senator 
Daniel  of  Virginia,  ever  said  the  bill  went  through 
congress  "like  the  silent  tread  of  a  cat"  he  was  at  the 
time  making  a  harrangue  to  his  wild-eyed  constituents 
and  not  giving  testimony  under  oath  before  a  court  of 
justice.  The  truth  is,  when  the  bill  was  under  consider- 
ation nobody  was  foolish  enough  to  insist  that  the  gov- 
ernment should  enrich  bullion  buyers  by  giving  them 
103  cents'  worth  of  silver  for  100  cents,  and  hence 
there  was  no  opposition  to  dropping  the  silver  dollar 
from  the  list  of  pieces  to  be  coined. 

In  the  concluding  paragraphs  of  his  first  chapter 
Mr.  Harvey  introduces,  with  much  display  of  incor- 
ruptible honesty  and  superior  intelligence,  a  table  of 
an  English  statistician  giving  the  quantity  of  gold  and 
silver  in  the  world,  both  coined  and  uncoined,  at  six 
periods,  beginning  with  the  year  1600  and  ending  with 
that  of  1890.  It  is  just  as  impossible  to  tell  how  many 
grains  of  gold  and  silver  there  were  in  the  world  coined 
and  uncoined  in  either  1600, 1700, 1800  or  1890  as  it 
would  be  to  number  the  fleas  in  Egypt,  or  the  mosqui- 
toes in  the  everglades  of  Florida.     AH  statisticians 


"  COIN'S  FINANCIAL  SCHOOL,"  11 

can  do  is  to  make  an  estimate  of  the  gold  and  silver  in 
sight  —  in  public  banks  and  national  treasuries  —  and 
to  indulge  in  rough  guesses  as  to  the  amounts  in  the 
hands  of  the  people.  This  way  of  making  estimates 
leaves  almost  infinite  room  for  the  expression  of 
individual  preferences.  If  the  statistician  desires 
much  or  little  of  either  metal  to  suit  his  own  views, 
he  will  make  much  or  little.  But  what  has  all  this  to 
do  with  the  question  of  the  free  coinage  of  silver  in 
the  United  States?  Nothing,  Mr.  Harvey  is  simply 
pumping  wind,  not  making  argument. 

Silver  has  been  assigned  to  its  true  position  among 
the  money  metals  of  the  commercial  world,  and  in 
this  position  it  is  being  more  freely  used  to-day  as 
money  than  it  ever  was  before  since  time  began.  Not 
an  ounce  of  it  has  been  driven  out  of  circulation  by 
what  Mr.  Harvey  is  pleased  to  call  demonetization. 
His  pretentious  but  shallow  arguments  in  favor  of  the 
propositions  he  attempts  to  discuss  might,  perhaps,  be 
creditable  to  the  intelligence  of  the  boy  of  12,  whose 
likeness  adorns  the  cover  of  Mr.  Harvey's  book,  and 
who  is  set  forth  as  the  instructor  of  '^  Coin's  Financial 
School,"  but  I  should  suppose  a  full  grown  man  would 
blush  to  own  them. 


12  ANSWER  TO 


REVIEW  OF  SECOND  CHAPTER. 


'^N  THE  first  chapter  of  "Coin's  Financial  School" 
,^\  Mr.  Harvey  is  supposed  to  have  convinced  an 
^^"^  imaginary  audience  of  boys  that  the  following 
falsehoods  were  truths,  to-wit : 

1.  That  the  silver  dollar  was  the  dominating  unit 
in  the  original  monetary  system  of  the  United  States. 

2.  That  this  dominating  unit  was  secretly  "  assas- 
sinated "  in  1873. 

In  the  second  chapter  he  congratulates  himself 
upon  his  success  as  an  instructor,  and  fancies  the 
newspapers  and  financiers  of  Chicago  are  amazed  at 
his  wisdom  and  overwhelmed  by  his  logic;  indeed, 
throughout  the  whole  book  his  imaginary  triumphs  are 
set  forth  in  such  gorgeous  colors  that  a  reader  is 
inclined  to  suspect  the  capitalists  of  the  Windy  City 
had  quietly,  but  with  villainous  intent,  mixed  opium 
with  his  chewing  gum  or  firewater  with  his  milk. 

After  dwelling  quite  sufficiently  on  his  own  superi- 
ority to  other  men,  Mr.  Harvey  proceeds  to  give  us 
further  information  about  ratios,  but  as  we  had  in  his 
first  chapter  all  the  instruction  with  respect  to  this 
matter  an  intelligent  reader  needs,  we  shall  skip  his 
superfluous  remarks,  and  review  his  sham  discussion 
with  Mr.  Lyman  Gage.  Mr.  Gage  is  a  real  person,  but 
the  controversy  Mr.  Harvey  claims  to  liave  had  with 
him  never  occurred  —  that  is  to  say,  it  is  wholly  fic- 
titious, or  in  other  words,  a  plain  lie.  But  Gage  is 
represented  to  have  been  in  attendance  at  Coin's 
school,  and  is  said  to  have  asked  the  following  ques- 
tion :  "  How  can  you  have,  at  any  fixed  ratio,  the 
same  commercial  value  on  two  separate  metals  that 
are  from  time  to  time  varying  in  quantity  of  each  pro- 
duced ?  ^' 


"COIN'S  FINANCIAL  SCHOOL."  13 

The  answer  to  this  should  have  been,  "  The  same 
relative  commercial  value  can  not  be  maintained  on 
two  separate  metals  that  are  from  time  to  time  vary- 
ing in  quantity  of  each  produced."  The  tables  which 
Mr.  Harvey  introduces  on  pages  31  and  34  would  have 
conclusively  proven  the  substantial  correctness  of  such 
an  answer.  But  Mr.  Harvey  answers  the  question  in 
another  way,  and  this  is  his  answer : 

"All  commercial  values  are  regulated  by  supply 
and  demand.  The  commercial  value  of  any  com- 
modity depends  on  supply  and  demand.  If  the  demand 
for  a  particular  commodity  is  continuously  rising  and 
the  supply  does  not  increase,  the  commercial  value 
will  continuously  rise."     (P.  27.) 

This  is  in  part  correct,  and  was  evidently  in  part 
taken  from  some  reputable  writer  on  political  economj^ 
but  it  should  be  remarked  that  it  is  impossible  for  the 
demand  on  any  commodity  to  be  "  continuously  ris- 
ing;" nor  is  it  possible  for  the  commercial  value  to 
continuousl}'"  increase,  for  if  it  did  the  commodity 
would  attain  a  point  beyond  the  reach  of  even  a 
millionaire.  As  prices  increase  demand  diminishes, 
and  if  prices  increased  "contii^uously "  the  demand, 
instead  of  "  continuously  ris'ag,"  would  finally  alto- 
gether disappear. 

Mr.  Harvey  continues :  "  When  the  mints  of  the 
world  are  thrown  open,  and  the  governments  say  '  we 
will  take  all  tlie  silver  and  gold  that  comes '  " — 

I  break  this  sentence  simply  to  call  the  reader's 
attention  to  the  fact  that  Mr.  Harvey  speaks  of  the 
"  mints  of  the  world  "  and  the  "  governments  "  of  the 
world,  and  not  of  a  few  of  the  mints  of  the  world,  nor 
of  the  mints  of  the  United  States  alone. 

" — an  unlimited  demand  is  established.  Hie  sup- 
ply is  limited,  and  the  demand  pulls  them  both  plumb 
up  to  the  point."  The  point  referred  to  is  equal  com- 
mercial value  at  the  ratio  fixed. 

Before  proceeding  to  an  examination  of  wliat  Mr. 
Harvey  has  said  about  the  "  power  of  unlimited  de- 
mand," permit  me  to  call  attention  to  the  fact  that  he 
does  not  himself  propose  to  wait  until  "  the  miate  of 


14  ANSWER  TO 

the  world  are  thrown  open  "  to  the  free  coinage  of  sil- 
ver. On  the  contrary,  as  will  be  seen  on  many  pages 
of  his  book,  but  notably  in  pages  from  130  to  150,  he 
advocates  independent  bimetallism  —  free  coinage  by 
the  United  States  alone.  Thus  far,  however,  he  has 
dodged  the  issue  he  finally  makes  prominent,  and 
throughout  his  book  he  distorts  arguments  which  are 
only  pertinent  in  support  of  international  bimetallism 
to  the  maintenance  of  his  scheme  of  independent  free 
coinage.  The  reader  in  this  discussion,  therefore, 
should  keep  clearly  in  mind  the  difference  between  in- 
ternational free  coinage  and  national  free  coinage. 
That  is  to  say,  the  free  coinage  of  silver  by  all  nations 
at  a  ratio  agreed  upon  and  the  free  coinage  of  silver  by 
one  nation  or  by  a  few  nations. 

If  all  "the  mints  of  the  world  were  thrown  open," 
and  all  the  governments  of  Europe  were  disposed  to 
"  say  we  will  take  all  the  gold  and  silver  that  comes," 
it  might  not  be  amiss  for  the  United  States  to  become 
a  party  to  the  arrangement,  and  I  should  certainly  not, 
as  a  voter,  interpose  an  objection  to  it.  But  while  in- 
ternational free  coinage  is  one  thing,  and  has  the  sup- 
port of  multitudes  of  intelligent,  honest  and  patriotic 
men,  independent  or  national  free  coinage  is  quite  an- 
other matter,  and  means  simply  a  partial  repudiation 
of  public  and  private  debts,  the  annihilation  of  national 
credit,  and  the  utter  disregard  of  all  considerations  of 
commercial  honor. 

In  the  one  case  our  silver  money  would  be  the 
money  of  commerce,  good  here  and  equally  good  else- 
where. In  the  other  case,  it  would  be  a  local  currency, 
worthless  as  money  in  any  country  but  ours.  In  the 
one  case  gold  and  silver  at  a  reasonable  ratio  might 
not  greatly  deviate  from  each  other  in  commercial 
value.  In  the  other  silver  would  circulate  as  a  nom- 
inal dollar  in  the  United  States,  and  be  worth  only  fifty 
cents  in  Europe,  In  the  one  case  gold  and  silver  could 
both,  perhaps,  be  kept  in  circulation  together.  In  the 
other,  gold  being  the  undervalued  metal,  would,  under 
the  operation  of  Gresham's  law,  go  to  some  country 
where  it  was  more  highly  esteemed.    International  bi- 


"  COIN'S  FINANCIAL  SCHOOL."  15 

metallism  means  substantially  the  same  yardstick — 
the  same  measure  of  values  the  world  over.  National 
or  independent  free  coinage  of  silver  means  precisely 
what  Mexico  has  now,  to-wit :  a  so-called  silver  dollar 
worth  but  fifty  cents. 

It  is  this  independent  or  national  free  coinage  which 
Mr.  Harvey  advocates,  but  in  doing  so  he  cunningly 
weaves  into  his  alleged  arguments  facts  and  figures 
which  alone  are  applicable  to  the  support  of  interna- 
tional bimetallism,  and  thus  confuses,  misleads  and  de- 
ceives those  who  read  hastily  or  are  unfamiliar  with 
the  subject.  The  truth  is,  he  does  not  want  interna- 
tional bimetallism,  for  the  reason  that  it  would  make  a 
better  dollar  than  he  desires.  It  is  his  avowed  purpose 
to  pay  a  dollar  of  debts  with  fifty  cents  worth  of  silver. 

To  go  back  now  to  Mr.  Harvey's  alleged  reply  to 
Mr.  Gage's  alleged  question,  it  will  be  observed  he 
affirms  that  in  the  contingency  he  suggests  an  "  unlim- 
ited demand"  would  be  "established."  The  words 
"  unlimited  demand  "  are  simply  trick  words.  All  de- 
mand for  money  is  limited  to  the  necessity  which 
exists  for  money  to  measure  the  value  of  commodities 
or  to  facilitate  their  exchange.  As  these  commodities 
are  limited,  the  demand  for  money  can  not  be  unlim- 
ited. The  idea  that  there  could  be  an  unlimited  de- 
mand for  yardsticks  to  measure  a  limited  supply  of 
cloth  is  nonsense,  and  it  is  equally  absurd  to  say  that 
there  could  be  an  unlimited  demand  for  money  to 
measure  a  limited  supply  of  commodities.  When  there 
is  no  demand  for  meal,  men  do  not  take  corn  to  the 
mill,  and  if  they  did,  their  grist  would  be  of  no  com- 
mercial value,  and  so  when  there  was  no  demand  for 
money,  men  would  not  take  bullion  to  the  mint,  and  if 
they  did,  it  would  simply  add  bulk,  not  value,  to  the 
world's  stock  of  coin.  The  whole  of  Mr.  Harvey's  argu- 
ment, from  the  beginning  of  the  book  to  the  end  of  it, 
based  on  what  he  assumes  to  be  "  the  power  of  unlim- 
ited demand,"  must  fall  with  the  rotten  premise  upon 
which  it  is  constructed.  Indeed,  it  would  be  much 
nearer  the  truth  to  affirm  that  the  supply  of  money 
metals  is  unlimited,  than  to  say  the  demand  for  money 


16  ■  ANSWER  TO 

is  without  limit.  This  ridiculous  chatter  about  unlim- 
ited demand,  we  can  not  have  too  much  money,  etc., 
comes  down  to  us  from  the  advocates  of  irredeemable 
paper  money.  Men  who  do  not  desire  to  pay  their 
debts  in  full  have  always  favored  a  cheaper  dollar,  and 
always  will. 

Mr.  Harvey  seeks  by  lengthy  tables  of  figures  (p. 
31-34)  to  show  how  nearly  gold  and  silver  kept  pace 
with  each  other  in  commercial  value  at  certain  ratios  in 
a  run  of  many  years.  These  statistics  may  possibly  be 
pertinent  in  an  argument  favoring  international  bi- 
metallism, but  they  have  no  relevancy  whatever  to  in- 
dependent or  national  free  coinage,  and  he  uses  them 
simply  to  confuse  and  deceive  those  who  have  given 
monetary  questions  but  little  thought.  On  page  35,  for 
illustration,  he  says:  "From  1687  to  1873  the  commer- 
cial ratio  of  the  two  metals  was  never  lower  than  1  to 
14.14,  and  never  higher  than  1  to  16.25,  a  variatiou  of 
only  about  two  points." 

Now,  two  points,  in  the  parlance  of  the  stock  ex- 
change, means  two  cents.  A  stock  that  has  advanced 
two  per  cent,  on  its  nominal  value  is  said  to  have  gone 
up  two  points.  A  stock  that  has  declined  two  per  cent, 
of  its  nominal  value  is  said  to  have  gone  down  two 
points,  and  hence  two  points  to  the  general  reader 
seem  a  matter  so  trivial  as  to  be  hardly  worth  consider- 
ing. But  is  it  so  in  this  case  ?  What  does  Mr.  Harvey 
mean  by  two  points  ?  He  did  not  dare  to  say,  for  the 
variation  he  refers  to  was  a  variation  of  over  two  ounces 
of  silver  worth,  prior  to  1873,  over  $1  per  ounce  in  gold. 
The  variation  of  over  $2  between  the  commercial  ratio 
and  the  legal  ratio  of  one  ounce  of  gold  and  16  ounces 
of  silver  is  no  slight  thing  to  the  commerce  of  the 
world;  and  yet  when  all  civilized  countries,  except 
England,  were  on  a  bimetallic  basis,  deviations  of  the 
market  ratio  from  the  legal  ratio  were  constantly  oc- 
curing.  It  may  be  true  that  the  divergence  at  times 
was  not  great,  but  it  was  great  enough  to  banish  gold 
from  the  United  States  from  1810  to  1834 ;  great  enough 
to  drive  silver  coin  from  circulation  in  this  country 
from  1834  to  1863 ;  so  great  that  in  1834  gold  sold  iu 


"  COIN'S    FINANCIAL  SCHOOL."  17 

Philadelphia  at  a  premium  of  from  4  to  4^  per  cent. 
The  "  two  points "  referred  to  by  Mr,  Harvey  would 
have  put  a  premium  on  either  gold  or  silver  of  over  11 
per  cent.,  and  yet  in  this  day  a  premium  of  yV  of  1 
per  cent,  on  either  gold  or  silver  is  enough  to  carry  the 
higher-priced  metal  to  the  melting  pot,  or  to  foreign 
countries,  and  so  take  it  out  of  circulation.  The  reader 
should  bear  in  mind  in  this  connection  that  the  half  of 
1  cent  is  6  per  cent,  interest  on  $1  for  one  month.  If  a 
bullion  buyer  can  make  his  turn  of  coin  at  one-half  per 
cent,  profit  within  fifteen  days,  he  will  make  at  the  rate 
of  12  per  cent,  per  annum  on  his  money.  If  the  profit 
is  1  per  cent,  he  will  make  24.  If  2  per  cent,  his  profit 
will  be  at  the  rate  of  48  per  cent,  per  annum ;  and  so 
the  "•  two  points  "  referred  to  by  Mr.  Harvey  would 
mean  not  only  300  percent,  per  annum  to  a  bullion  buyer 
who  could  keep  his  money  actively  employed,  but  the 
disappearance  of  the  undervalued  coin  from  circulation, 
and  a  distressing  stringency  in  the  money  market  of  the 
country  where  the  coin  was  undervalued.  England  did 
not  adopt  the  gold  standard  until  1816.  Prior  to  this 
date  all  civilized  countries  were  on  a  bimetallic  free- 
coinage  basis,  and  yet  even  then,  as  has  been  stated, 
the  differences  constantly  occurring  between  the  market 
ratio  and  the  legal  ratio  of  the  two  metals,  caused  much 
inconvenience  and  great  loss  to  them.  England  was 
compelled  to  limit  the  coinage  of  silver  in  order  to  re- 
tain her  needed  supply  of  gold.  The  United  States  in 
1834  was  obliged  to  change  the  legal  ratio  to  16  to  1  in 
order  to  call  back  the  gold  which  had  disappeared  un- 
der the  ratio  established  by  the  act  of  1792.  France, 
Germany,  Belgium,  Italy,  Spain,  Portugal,  Austria, 
Netherlands,  etc.,  have  all  in  recent  years  limited  the 
coinage  of  silver  for  the  very  purpose  of  securing  and 
maintaining  a  sufficiency  of  the  coin  of  both  metals  in 
concurrent  circulation.  The  free  coinage  of  silver  in 
the  absence  of  an  agreement  between  commercial  na- 
tions, means  simply  silver  monometallism  lor  some  and 
gold  monometallism  for  others.  Restricted  coinage  of 
silver  is  the  nearest  approach  to  actual  bimetallism 
attainable  witliout  an  international  agreement. 


18  ANSWER  TO 

It  is  folly  to  talk  about  the  quantity  and  kind  of 
money  in  circulation  50,  100  or  500  years  ago.  The 
vital  query  is  what  kind  of  money  is  required  to-day 
to  facilitate  exchanges  and  carry  on  the  increased  and 
increasing  commerce  of  the  world.  Civilized  nations 
have  made  their  decision  respecting  this  matter  and 
have  chosen  to  leave  their  mints  open  to  the  free 
coinage  of  gold  and  the  restricted  coinage  of  silver, 
and  by  this  method  they  have  been  able  to  keep  a 
sufficiency  of  the  coins  of  both  metals  in  circulation. 

In  his  discussion  of  the  quantity  of  gold  and  silver 
in  the  world,  Jvlr.  Harvey  says  (p.  39) :  "  The  disloca- 
tion of  the  parity  of  the  two  metals  by  the  demonet- 
ization of  silver  and  the  attempt  to  maintain  our  credit 
in  gold  has  reduced  the  redemption  monev  of  the  world 
from  $7,747,590,215  to  $3,727,018,869,  or  a  little  less 
than  one -half  the  original  amount." 

There  are  three  assumptions  in  this  statement 
wholly  unfounded. 

1.  There  has  been  no  "  dislocation  of  the  parity  of 
the  two  metals  "  except  in  Mexico  and  other  countries 
having  free  coinage  and  a  silver  basis.  The  com- 
mercial countries  of  the  world,  like  England, -Germany, 
France,  and  the  United  States,  have  provided  against 
this  "  dislocation  "  by  recourse  to  the  restricted  coinage 
of  silver,  and  in  these  countries  gold  and  silver  are  main- 
tained on  a  parity  with  each  other. 

2.  There  has  been  no  "  demonetization  "  of  silver. 
The  word,  though  in  common  use,  is  a  misnomer. 
There  has  simply  been  a  limitation  of  the  coinage  of 
silver. 

8.    The  so-called  "  redemption  money  of  the  world  " 
has  not  been  reduced  to  the  extent  of  a  single  farthing. 
The  stock  of  the  world's  gold  is  estimated  at  $3,965,- 
900,000 ;  silver,  $  4,055,700,000 ;  total,  $  8,021,600,000. 

Of  this  total  $7,401,700,000  is  a  full  legal  tender  in 
the  payment  of  all  debts  and  $  619,900,000  is  endowed 
with  limited  legal  tender  power.  Every  dollar  of  the 
whole  sum  is  redemption  money  in  the  sense  that  it 
has  itself  no  redeemer,  but  is  the  metal  or  money  in 
which  all  substitutes  for  money  are  redeemed,  and  all 


"  COIN'S  FINANCIAL  SCHOOL."  19 

debts  about  which  there  is  or  is  not  any  controversy 
legally  paid. 

In  conclusion  let  me  recapitulate  the  points  which 
should  be  thrown  out  of  Mr.  Harvey's  financial  gasbag, 
for  with  their  dismissal  the  bag  will  have  shrunk  from 
the  handsome  dimensions  of  a  balloon  to  the  size  of  an 
ordinary  bladder. 

1.  The  statement  that  the  silver  dollar  was  the 
dominating  unit  in  the  original  monetary  system  oi 
the  United  States  is  not  true,  and  hence  all  the  argu- 
ment founded  upon  this  statement  is  simply  rubbish. 

2.  The  statement  that  this  alleged  dominating  unit 
was  secretly  "  assassinated  "  in  1873  is  incorrect,  and 
hence  all  the  invective -based  upon  this  error  is  empty 
and  valueless. 

3.  The  assumption  that  there  can  be  an  unlimited 
demand  for  money  for  the  measure  or  exchange  of  a 
limited  supply  of  commodities  is  a  self  evident  false- 
hood, and  hence  the  argumentative  structure  built  on 
it  is  as  unsubstantial  as  a  bubble. 

4.  Mr.  Harvey  and  those  vdio  agree  with  him  seek 
not  international  bimetallism,  but  independent  free 
coinage  and  a  cheaper  dollar,  hence  his  tables  of  statis- 
tics and  arguments  in  support  of  international  bimet- 
allism are  used  with  fraudulent  intent,  and  have  no 
relevancy  whatever  to  the  question  of  independent 
free  coinage  to  which  he  is  committed. 

5.  Under  modern  conditions  a  premium  of  one- 
tenth  of  one  per  cent,  is  enough  to  carry  either  silver 
or  gold  coins  out  of  circulation ;  hence  his  proposition 
to  open  the  mints  of  the  United  States  to  free  coinage 
of  silver  means  the  loss  of  from  $  600,000,000  to  $  1,000,- 
000,000  of  gold  coin  from  our  currency. 

6.  Every  commercial  country  of  the  world  has 
found  that  in  the  absence  of  an  international  arrange- 
ment, a  stabler  and  more  abundant  supply  of  money 
can  be  obtained  by  the  restricted  coinage  of  silver  than 
by  the  free  coinage  of  silver,  hence  independent  free 
coinage  would,  according  to  the  experience  of  nations, 
be  not  simply  a  calamity  but  a  curse. 


20  ANSWER  TO 

7.  The  redemption  money  of  the  world,  the  money 
of  ultimate  j^ayment,  primary  money,  or  whatever  else 
coined  money  may  be  called,  which  is  its  own  re- 
deemer, is  more  abundant  to-day  than  ever  before,  and 
as  fully  clothed  with  purchasing  and  debt  paying  power 
as  it  ever  was. 


REVIEW  OF  THIRD  CHAPTER. 


yy'^F  THERE  were  no  money  and  we  had  to  depend 

^^\     on  exchanging  property  for  property,  we  could 

^^      find  a  subsistence,  but  there  would  be  no  such 

thing  as  our  present  civilization,  or  anything  like  it." 

(P.  44.) 

Certainly  not,  and  neither  would  there  be  if  we  had 
an  inferior  money  —  a  bulky  and  inconvenient  cur- 
rency like  that  of  Mexico,  China  and  Japan.  It  was 
for  the  purpose  of  getting  rid  of  the  vexatious  and 
expensive  delays  of  barter  that  this  thing  of  money  — 
something  of  great  value  in  small  ocmpass  —  was 
devised  But  under  Mr.  Harvey's  scheme  of  inde- 
pendent free  coinage,  2,000  silver  dollars  would  weigh 
124  pounds  avoirdupois  —  more  than  a  keg  of  nails  — 
and  yet  be  worth  only  $  1,000  in  the  markets  of  the 
world.  Will  any  sensible  man  claim  that  such  cum- 
brous money  would  be  an  aid  to  trade  and  commerce 
or  a  promoter  of  civilization  ? 

"As  stagnation  and  depression  would  result  from 
having  no  money,  then  a  part  of  these  evils  can  be 
brought  about  by  having  money  insufficient  in  either 
quality  or  quantity."     (P.  45.) 

True,  and  it  is  for  the  reason  suggested,  that  inde- 
pendent free  coinage  would  prove  to  be  a  calamity  to 
business.  By  substituting  a  silver  dollar  worth  50 
cents  for  a  silver  dollar  worth  100  cents,  we  should  get 
"insufficient  quality,"  and  the  moment  the  value  of 


"  COIN'S  FINANCIAL  SCHOOL."  21 

the  silver  dollar  was  reduced  below  its  present  standard 
gold  would  go  into  hiding  or  abandon  the  couiitrv,  and 
thus  leave  us  with  insufficient  "  quantity.'-  Hence  it 
is  that  such  a  combination  of  the  two  metals  should 
be  maintained  as  will  keep  both  of  equal  value  and 
both  in  circulation. 

"One  (silver)  was  the  monev  of  the  people  —  the 
other  (gold)  of  the  rich."     (P.  46.) 

It  is'  to  be  hoped  the  rich  still  constitute  a  part  of 
the  people,  but  whether  they  do  or  not  it  is  neverthe- 
less true  that  people  who  labor  with  their  hands  and 
live  by  the  sweat  of  their  faces  own  the  bulk  of  the 
money  of  the  country.  There  are  4,739,194  savings  bank 
depositors  alone,  and  this  number  is  probably  greatly 
exceeded  by  laboring  men  and  women  who  have  money 
deposited  in  other  banks  or  hid  away  in  stocking  legs 
or  in  their  pockets.  These  industrious  and  frugal 
workers  and  their  families  constitute  one-third  or  one- 
half  of  our  whole  population.  The  rich  do  not,  as  a 
rule,  hold  money  or  keep  it  idle.  They  invest  in  realty 
like  the  Astors,  railroads  like  the  Vanderbilts,  and 
manufacturies  like  the  Oarnegies.  The  money  of  the 
people  is  now  good.  Shall  it  be  made  poor  on  the 
false  pretext  that  only  the  rich  would  be  robbed? 

It  is  alleged  that  Mr.  John  R.  Walsh  asked  this 
question :  "  How  can  the  government,  by  passing  a 
law,  add  a  cent  to  the  value  of  any  commodity  ?  " 
(P.  47.) 

Permit  me  to  interject  between  this  question  and 
Mr.  Harvey's  alleged  answer  to  it,  a  few  questions  and 
answers  of  my  own.  Who  constitute  the  government? 
The  people.  How  does  it  raise  money  to  pay  for  any- 
thing? By  taxation.  Who  pays  this  tax  ?  The  people. 
How  then  can  any  Itiw  authorizing  an  expenditure, 
extravagant  or  otherwise,  for  liiis  or  that  commodity, 
add  value  to  the  commodities  of  the  whole  people?  It 
can  not.  On  the  contrary,  a  law  roquiring  the  con- 
sumption of  horses,  food,  clothing,  etc.,  as  in  war,  not 
only  adds  nothing  to  the  wealth  of  a  nation,  but 
diminishes  its  rf  sources  just  to  the  extent  of  the  waste 
incurred.     Mr.    Harvey,    however,    first    frames    tlie 


22  ANSWER  TO 

alleged  question  to  suit  himself,  and  then  answers  it  in 
this  way :  "  Suppose  that  Congress  should  pass  a  law 
to-morrow  authorizing  the  purchase  of  100,000  cavalry 
horses  and  the  government  entered  the  market  to  get 
these  horses.    Horses  would  advance  in  value."    (P.  47.) 

Horses  would  advance  not  by  reason  of  the  law, 
but  by  virtue  of  the  fact  that  the  government  had 
become  a  large  consumer  of  horses.  The  total  value 
of  the  horses  consumed,  however,  would  be  a  direct 
loss  to  the  people,  and  this  loss  would  more  than 
counterbalance  any  gain  to  the  country  which  could 
possibly  result  from  the  general  advance  in  prices 
which  such  a  purchase  by  the  government  would 
occasion.  In  other  words,  while  the  dealers  in  horses 
would  get  a  little  more  for  their  beasts,  the  owners  of 
other  commodities  would  not  only  pay  the  increased 
price,  but  in  time  be  called  upon  to  pay  for  100,000 
dead  horses.  This,  however,  is  not  all.  The  advance 
in  prices  of  horses  would  be  at  best  temporary.  The 
increased  demand  would  soon  create  an  increased 
supply,  and  prices  would  soon  drop  back  to  old  figures. 
To  illustrate  the  folly  of  attempting,  by  legislation,  to 
add  permanent  value  to  commodities,  let  me  call  atten- 
tion to  the  fact  that  Congress,  in  1890,  authorized  the 
purchase  of  4,500,000  ounces  of  silver  per  month. 
This  was  a  new  and  extraordinary  demand,  and  under 
it  silver  advanced  from  $  1.07  an  ounce  to  $  1.16 ;  before 
the  year  ended,  however,  it  fell  to  $  1.05.  In  1891  it 
dropped  to  95  cents.  In  1892  it  fell  to  84  cents,  and 
in  1893  to  73  cents.  Thus  it  is  that  supply  responds 
promptly  to  demand. 

"On'its  becoming  known  that  the  (Congressional) 
Committee  would  report  in  favor  of  a  high  tariff  on 
sugar,  the  market  value  of  the  stock  of  the  American 
Sugar  Refining  Company  advanced  15  per  cent."  etc. 
(R  48.) 

The  law  may  now,  as  in  1862-64,  compel  a  man  to 
accept  a  50-cent  dollar  in  full  payment  of  a  100-cent 
debt.  It  did  authorize  the  sugar  trust  to  steal  some 
$  12,000,000  or  more  from  the  consumers  of  sugar. 
But   such   laws   add   nothing   to   the   wealth    of    the 


"  COIN'S  FINANCIAL  SCHOOL."  23 

country  and  nothing  to  honest  men's  respect  for  legis- 
lators, and  yet  it  is  just  such  robbery  as  this  that  Mr. 
Harvey  would  have  the  government  sanction  by 
authorizing  the  free  coinage  of  silver  and  the  payment 
of  a  100-cent  debt  with  a  50-cent  dollar, 

"  Credit  money  is  a  title  to  commodity  money.  *  *  * 
Credit  money  does  not  add  anything;  it  facilitates — 
makes  convenient  the  transactions  of  business,  just  as 
your  wheat  certificates  add  nothing  to  the  exchange 
value  of  wheat."     (P.  53.) 

Mr.  Harvey  has  told  us  about  redemption  money, 
property  money,  primary  money,  and  now  to  confuse 
the  simple  minded  reader  still  further,  he  talks  about 
commodity  money,  and  yet  all  these  things  are  the 
same  thing  and  that  thing  is  money.  Monej^  is  recog- 
nized by  mankind  as  a  thing  of  value,  and  by  this 
universally  known  thing  of  value  the  value  of  other 
commodities  is  measured.  Money  not  only  serves  a 
similar  purpose  with  respect  to  value  that  a  yardstick 
does  with  respect  to  cloth,  but  it  has  a  further  attribute 
not  belonging  to  the  yardstick.  It  will  often,  if  not 
always,  be  accepted  in  exchange  for  the  commodity  it 
measures.  In  other  words,  money  is  a  medium  of 
exchange  and  a  measure  of  values,  and  maj^  be  used 
solely  as  a  measure,  or  conjointly  as  a  measure  and  a 
medium.  As  a  medium  it  should  be  recognized  the 
world  over  as  intrinsically  valuable.  As  a  measure  its 
value  should  be  as  nearly  unchangeable  as  it  is  pos- 
sible for  the  ingenuity  of  man  to  make  it.  Mr.  Harvey, 
on  page  54,  tells  us  that  "money  is  a  measure  of  value 
and  each  dollar  is  a  part  of  that  measure ; "  but  he 
seems  unable  to  comprehend  that  this  measure,  to  be 
an  honest  one,  should  be  unvarying. 

How,  it  may  be  asked,  can  the  value  of  a  commodity 
be  measured  by  money  in  the  absence  of  an  actual 
transfer  for  money?  Every  intelligent  man  lias  in  his 
mind  a  conception  of  the  value  of  a  dollar.  He  knows 
how  much  labor  it  will  buy,  or  how  much  labor  it  takes 
to  get  it;  how  much  of  this  or  that  commodily  il  will 
exchange  for,  and  how  much  annual  interest  it  will 
bring.     By  this  ideal  standard  he.  measures  the  value 


24  ANSWER  TO 

of  other  things  and  expresses  his  estimate  of  that  value 
in  dollars,  and  yet  a  million  estimates  ma}'^  be  made 
and  as  many  exchanges  efiected  without  the  actual  use 
of  a  single  dollar  of  money.  The  important  quality  in 
money,  therefore,  is  its  unchangeableness,  not  its 
quantity.  Activity  in  use  renders  quantity  a  matter 
of  secondary  importance.  When  men  have  confidence 
in  the  capacity  and  integrity  of  each  other,  $1,000  ^c- 
complish  more  work  than  $1,000,000  do  in  periods  of 
distrust  and  panic.  The  threat  of  free  coinage  and  a 
cheaper  dollar  is  now  doing  more  to  cripple  business 
and  keep  men  out  of  employ menl  than  all  tiie  other 
evils  which  afflict  the  country. 

Notwithstanding  what  Mr  Harvey  has  said  to  the 
contrary,  neither  a  greenback,  a  bank  note  nor  a  prom- 
issory note  of  any  kind  ''is  a  title  to  commodity 
money."  It  is  simply  a  promise  to  pay  a  dollar  in 
money,  and  this  promise  may  be  fulfilled,  or  may  not. 
Nor  is  the  promise  to  pay  a  dollar  alwaya  based  on 
money.  In  many  instances  it  is  founded  on  property 
which  may  be  readily  exchanged  for  money,  or  used 
in  redemption  of  the  written  or  printed  promise  to  pay 
money  which  has  been  issued.  Nor  is  it  true  in  all 
cases  that  these  promises  to  -pa,j  dollars  are  not  valua- 
ble independently  of  the  thing  we  call  money.  They 
are  often  a  lien  on  realty  or  personalty,  and  hence 
may  be  redeemed,  and  quite  often  are  redeemed  in 
houses,  lots,  lands,  merchandise,  etc. 

When  Mr.  Harvey  says  what  he  calls  "credit 
money"  "facilitates"  exchanges,  and  "makes  convenient 
the  transactions  of  business,"  he  virtually  concedes 
that  in  every  exchange  it  facilitates  and  every  debt  it 
pays  it  performs  with  respect  to  the  exchange,  and 
the  debt  the  full  office  of  property  money,  commodity 
money,  redemption  money  or  primary  money,  and  so 
to  the  full  extent  to  which  these  promises  to  pay 
money  pass  from  hand  to  hand  in  the  liquidation  of 
debts,  or  the  purchase  of  commodities,  they  discharge 
the  whole  duty  of  what  he  calls  "the  money  of  ulti- 
mate payment."  In  other  words,  in  so  far  as  tb  ' 
individuals  are  concerned  who  tender  and  accept  thi.< 


"COIN'S  FINANCIAL  SCHOOL."  25 

so-called  credit  money,  it  effects  a  complete  settle- 
ment and  final  discharge  of  all  obligations,  and  hence 
is  ''  ultimate/' 

I  think  it  safe  to  say  that  in  999  cases  out  of  every 
1,000  the  promise  to  pay  a  dollar  is  no  more  based  on 
mone}"  than  a  wheat  certificate  is  based  on  half-bushel 
measures.  What  renders  the  promissor}"^  note  of  an 
individual  acceptable  is  the  real  estate  or  the  visible 
personal  property  behind  it,  not  the  money  in  the 
man's  pockets. 

Mr.  Harvey  tell  us  that  "  three  lines  of  credits  are 
built  up  on  primary  money  :  (1)  credit  money  —  paper 
bills  and  all  forms  of  token  money — all  redeemable  in 
primary  money;  (2)  checks,  drafts,  bills  of  exchange, 
and  other  forms  of  like  paper  payable  on  demand  ; 
(3)  notes,  bonds,  accounts,  and  other  forms  of  credit, 
payable  at  a  particular  day  in  the  future,"  etc.  (P.  55.) 

How  do  business  men  make  out  a  statement  of 
their  assets  and  liabilities  ?  Do  they  simply  count  the 
money  on  hand,  and  then  make  an  estimate  of  their 
indebtedness,  and  because  their  indebtedness  exceeds 
this  money,  conclude  they  are  bankrupts  ?  A  farmer  has 
160  acres  of  fertile  land,  with  houses,  barns,  and  live 
stock.  He  owes  $100,  and  perhaps  has  not  in  his 
possession  $5  of  ''primary  money."  Is  he  insolvent? 
A  merchant  may  have  $100,000  worth  of  merchandise, 
and  his  sales  may  amount  to  $1,000  per  day.  If  he 
■owes  $20,000.  and  has  but  $500  of  "commodity  money" 
on  hand,  is  he  unworthy  of  credit  ?  If  the  country  had 
10,000  millions  of  such  "  primary  money"  as  Mr.  Har- 
vey would  create,  the  money  would  be  among  the  least 
valuable  of  its  possessions.  To  say  that  primary 
money,  redemption  money,  commodity  money,  the 
money  of  ultimate  payment,  or  any  other  money  is  the 
foundation  of  our  credit  system,  is  equivalent  to  saying 
that  the  merchant's  line  of  credit  is  and  should  be 
based  on  the  number  of  yardsticks  in  his  store;  the 
warehouseman's  on  his  scales;  the  wine  dealer's  on  liis 
gallon  measures;  and  the  butchers  on  his  steelyards. 
Pro})erty,  real  and  personal  —  houses,  lots,  lands,  live 
Block,  agricultural  products,  railroads,  vessels,  manu- 


26  ANSWER  TO 

factories,  merchandise,  petroleum,  coal,  iron,  copper, 
gold  and  silver  mines,  as  well  as  gold  and  silver  coin, 
are  the  true  basis  of  our  credit  system.  Money  simply 
measures  the  value  of  these  things  and  facilitates  their 
exchange.  The  grease  on  the  axle  of  the  wheel  is  not 
the  most  important  thing  about  a  wagon,  and  does  not 
sustain  the  load.  It  simply  contributes  to  the  easy 
movement  of  the  vehicle.  The  panics  Mr.  Harvey 
refers  to,  and  notably  those  of  1837,  '57,  and  '73,  re- 
sulted from  over  speculation  and  an  inferior  currency. 
The  panic  of  1893  sprang  from  the  general  belief  that 
under  the  silver  legislation  of  1890  the  country  was 
rapidly  approaching  a  silver  basis.  The  repeal  of  the 
purchasing  clause  of  the  Sherman  law  restored  con- 
fidence and  ended  the  monetary  fright.  On  pages 
from  56  to  64  Mr.  Harvey  has  not  only  written  himself 
down  an  ass  several  times,  but  by  his  absurd  pictorial 
illustrations  has  shown  that  he  holds  an  indefeasible 
title  to  the  cognomen. 

In  concluding  let  me  call  attention  to  certain  facts 
which  Mr.  Harvey  seems  unable  to  comprehend : 

1.  That  the  abandonment  of  the  money  of  the  civ- 
ilized world  and  the  adoption  of  a  cumbrous  and  in- 
ferior currency  would  be  a  step  in  the  direction  of 
barter  and  barbarism. 

2.  The  far  larger  share  of  the  money  of  any  coun- 
try belongs  to  the  laboring  classes,  and  hence  the  loss 
resulting  from  its  debasement  would  fall  most  heavily 
on  them. 

3.  The  law  can  add  nothing  to  the  value  of  a  com- 
modity without  detracting  an  equal  or  larger  sum  from 
the  value  of  other  commodities. 

4.  While  money  substantially  measures  all  values, 
it  comes  into  actual  use  in  comparatively  few  ex- 
changes. "  Commerce  is  an  exchange  of  produce 
against  produce.  So  much  imported,  so  much  ex- 
ported." 

5.  "  Credit  money,"  or  a  "  warehouse  certificate," 
to  the  full  extent  to  which  it  passes  from  hand  to  hand 
in  the  liquidation  of  debts,  or  the  purchase  of  com- 


"  COIN'S  FINANCIAL  SCHOOL."  27 

modities,  discharges  the  whole  duty  of  tlie  '"  money  of 
ultimate  payment.'' 

6.  The  credit  system  is  based  on  all  property,  real 
and  personal,  and  not  alone  on  what  John  Stuart  Mill 
says  is  intrinsically  the  most  '"insignificant  thing  in 
the  economy  of  society,"  to-wit :  money. 


REVIEW  OF  FOURTH  CHAPTER. 


^^V%R.  HARVEY  has  hitherto  endeavored  to  beguile  the 
711  reader  into  the  belief  that  prior  to  1873  the 
differences  between  the  commercial  value  ol 
gold  and  silver  at  the  ratios  established  had  always  been 
so  slight  as  to  create  no  disturbance  in  the  monetary 
affairs  of  nations.  If  this  proposition  were  well  founded 
it  would  afford  no  support  to  his  scheme  of  indepen- 
dent free  coinage,  for  prior  to  1871  the  mints  of  all 
countries,  except  England,  were  open  to  free  coinage 
of  both  metals,  and  tlie  result  which  follovv-ed  such  a 
condition  of  affairs  could  not  be  expected  to  ensue 
from  entirely  different  conditions.  In  other  words,  ail 
nations  might  do  what  one  alone  could  not  accomplisli. 

But  Mr.  Harvey  has  thus  far  omitted  to  notice  par- 
ticularly certain  well-known  incidents  in  the  history  of 
bimetallism,  which  if  left  unexplained  were  likely  to 
()verthi-ow  even  his  irrelevant  arguments  and  tal)les  o( 
statistics,  and  so  he  now  alleges  that  Professor  Laugh- 
lin  asked  this  question  : 

"Is  it  not  a  fact  that  several  times  prior  to  .1857 
silver  coin  sold  at  a  premium  as  high  as  8  per  cent, 
over  gold?"  "  (Page  68.) 

"  Yes,  that  is  true,"  Mr.  Harvey  replies,  and  then  on 
page  69  continues,  "  We  were  s])eaking  of  silver  and 
gold  bullion,  and  not  of  silver  coin." 

In  other  words,  Mr.  Harvey  admits  that  silver  coin 
sold  at  a  premium  of  8  per  cent,  over  gold,  but  does 


28  ANSWER   TO' 

not  concede  that  there  was  at  any  time  such  diiference 
between  the  mint  value  and  the  market  value  of  gold 
and  silver  bullion  as  would  unfavorably  affect  trade  and 
commerce.  He,  therefore,  undertakes  to  explain  why 
silver  coin  attained  to  so  high  a  premium,  and  says : 

"  A  demand  often  arises  for  small  money,  .  .  . 
This  was  the  case  in  New  York  last  j^ear,  1893,  wdien 
silver  dollars  commanded  a  premium  of  3  per  cent— 
not  because  of  the  silver  being  worth  more  than  a  dol- 
lar, but  because  factories  had  to  have  small  bills  .  .  . 
in  paying  off  their  men.  They  paid  the  same  premium 
for  one  and  two  dollar  bills."     (Page  69.) 

There  are  three  errors  in  Mr.  Harvey's  answer  thus 
far.  During  the  panic  of  1893  gold,  greenbacks  and 
national  bank  notes  were  suddenly  withdrawn  from 
banks  and  from  circulation  by  frightened  depositors. 
So  large  were  these  withdrawals  and  so  general  was 
the  hiding  away  of  money  by  the  people  that  there 
was  a  currency  famine  in  the  land.  The  banks  of 
New  York,  Boston,  Philadelphia  and  other  large  cities 
practically  suspended  payment,  adjusted  their  balances 
by  means  of  clearing  house  certificates,  and  declined  to 
honor  checks  drawn  on  them  in  money  of  any  kind. 
During  the  latter  part  of  the  period  covered  by  this 
monetary  scare,  money  in  New  York,  whether  small  or 
large,  paper  or  metal,  commanded  a  premium,  not  in 
exchange  for  gold,  greenbacks,  or  national  bank  notes, 
but  in  exchange  for  checks  on  banks  from  which  at  the 
time  no  money  could  be  obtained. 

It  is  not  true  that  this  demand  for  currency  came 
solely  from  the  proprietors  of  manufactories,  for  these, 
as  a  rule,  managed  to  go  through  the  financial  storm 
with  "  credit  money  "  of  their  own  making.  The  de- 
mand for  currency  came  from  those  who  could  use 
ready  money  more  advantageously  than  bank  checks, 
on  which  no  money  could  at  the  time  be  realized. 
And  so  it  came  about  that  men  would  exchange  a 
certified  check  calling  for  $1,030  for  $1,000  of  any 
kind  of  money,  small  or  large. 

It  is  not  true  that  any  one  during  the  panic  of  1893 
exchanged  bank  notes,  greenbacks  or  gold  "  for  silver 


"  COIN'S  FINANCIAL  SCHOOL."  29 

dollars  and  paid  a  premium  of  three  per  cent."  for 
them.  The  government  had  not  suspended  payment, 
and  hence  stood  ready  to  pay  out  silver  dollars  on  de- 
mand in  exchange  for  either  greenbacks,  gold  certifi- 
cates, silver  certificates,  treasury  notes  or  gold.  It  will 
be  seen  from  all  this  that  Mr.  Harvey'sanswer  thus 
far  is  at  least  disingenuous,  if  not  wholly  false.  He 
continues:  "A  great  inconvenience  had  arisen  for  the 
want  of  small  money  " — 

Where  had  it  arisen,  and  when?  Mr.  Harvey  does 
not  state,  but  he  is  now  referring  to  "  several  times 
prior  to  1857." 

— "  and  a  premium  had  to  be  paid  to  get  it.  At  the 
time  you  speak  of" — 

Professor  Laughlin  is  alleged  to  have  referred  to 
"several  times  prior  to  1857,"  not  to  any  particular 
time. 

— "  nearly  all  of  the  small  money  was  made  from 
silver  " — 

More  small  money  is  now  made  from  silver  than 
ever  before  in  the  history  of  the  world. 

— "  and  on  account  of  the  French  premium  for 
silver  our  silver  was  leaving  us  " — 

The  United  States  had  free  coinage  then — inde- 
pendent free  coinage,  just  the  sort  of  free  coinage  Mr. 
Harvey  now  proposes  to  have  the  government  estab- 
lish. Why  then  did  our  silver  abandon  the  country? 
Because  in  the  absence  of  an  international  agreement 
the  two  metals  under  free  coinage  can  not  be  kept  in 
circulation  together.  France  took  our  silver  because 
after  1834  we  undervalued  it.  Independent  or  national 
free  coinage  means,  as  I  have  before  stated,  simply 
gold  monometallism  for  some,  silver  monometallism 
for  others,  and  bimetallism  for  nobody. 

— ".Small  money  was  scarce" — • 

Where  ? 

— "  and  frequently  commanded  a  premium  " — 

Here  or  in  France  ? 

— "  Not  on  account  of  the  value  of  silver  bullion,  but 
upon  the  demand  for  small  money." 


30  ANSWER  TO 

This  as  a  whole  is  about  the  most  senseless  and 
indefinite  statement  it  has  ever  been  my  luck  to  en- 
counter. Does  Mr.  Harvey  mean  that  France  bought 
u  p  our  silver  coins  and  paid  more  than  bullion  prices 
ior  them?  The  French  people  had  never  used  our 
silver  money ;  but  even  if  our  coins  had  been  familiar 
to  them,  why  should  France  pay  eight  per  cent,  more 
for  our  coin  than  for  our  bullion  when  at  a  cost  of  less 
than  one-half  of  one  per  cent,  her  mints  could  have 
converted  bullion  into  franc  or  five  franc  pieces? 
Nonsense  !  American  silver  left  America  not  because 
there  was  a  scarcity  of  small  money  abroad ;  not  be- 
cause our  silver  coin  was  worth  more  in  France  than 
silver  bullion,  but  because  having  lost  our  gold  under 
the  15.1  ratio  of  1792,  we  sought  in  1834  to  tempt  it 
back  by  fixing  the  ratio  at  16.1.  By  this  change  of 
ratio  we  induced  gold  to  return,  but  drove  silver  to 
countries  where  it  was  more  highly  esteemed.  Under 
the  act  of  1792  we  had  silver  monometallism ;  under 
that  of  1834  we  had  gold  monometallism,  and  finally 
by  the  restricted  coinage  of  silver  since  1873,  we  have 
secured  bimetallism,  the  very  thing  Mr.  Harvey  pre- 
tends to  want,  and  yet  foolishly  objects  to. 

It  may  be  possible,  however,  that  Mr.  Harvey  in- 
tended the  reader  to  infer  it  was  in  this  country  and 
between  our  own  people  that  "  silver  coin  sold  at  a 
premium  as  high  as  eight  per  cent,  over  gold  prior  to 
1857,"''  and  that  this  premium  was  due  not  to  an  under 
valuation  of  silver  by  the  law  of  1834,  and  the  conse- 
quent exportation  of  silver  bullion  to  countries  where 
:t  was  more  highly  valued,  but  solely  "  to  a  scarcity  of 
small  money."  Let  us,  therefore,  give  him  a  toss  on 
ihis  horn  of  the  dilemma  and  see  where  he  lands. 

Under  the  act  of  1792  any  person  could  take  his 
silver  bullion  to  the  mint  and  have  it  coined  into  small 
money  for  nothing.  If,  however,  he  was  in  great  need 
of  money,  as  men  often  are  for  meal,  and  could  not 
wait  his  turn  to  have  the  bullion  coined,  the  law  pro- 
vided that  he  might,  by  consent  of  the  director  of  the 
mint,  exchange  it  without  delay  for  coin  at  a  cost  of 
one-half  of  one  per  cent,  of  its  value.     Under  the  ope- 


"  COIN'S  FINANCIAL  SCHOOL."  31 

ration  of  this  law,  therefore,  there  was  no  good  reason 
why  silver  money  should  be  scarce  when  silver  bullion 
was  abundant.  Under  the  act  of  1853  the  minor  coins 
were  heavil}'^  alloyed  for  the  very  purpose  of  keeping 
them  at  home  and  in  circulation.  This  law  provided 
that  any  person  could  take  gold  money  to  the  mint 
and  get  in  exchange  for  it — dollar  for  dollar — silver 
halves,  quarters  and  dimes.  From  1853  to  1861  gold 
bullion  was  relatively  cheaper  than  silver  bullion  and 
gold  coin  was  more  abundant  in  the  United  States 
than  silver  coin,  and  so  long  as  gold  coin  continued 
abundant  and  the  government  stood  ready  to  receive 
it  in  exchange  for  its  alloyed  minor  coins,  there  would 
naturally  have  been  no  scarcity  of  the  latter,  and  in 
truth  there  was  not.  When  Mr.  Harvej^,  therefore, 
seeks  to  account  for  the  fact  that  silver  coin  prior  to 
1857  sold  for  a  premium  as  high  as  eight  per  cent,  over 
gold,  by  attributing  it  wholly  or  in  part  to  a  trivial 
scarcity  of  small  money,  he  betrays  a  readiness  to  re- 
sort to  an}^  subterfuge  in  order  to  uphold  his  cause. 

Mr.  Eustis  is  now  said  to  have  asked  what  nations 
constituted  the  Latin  Union.  Mr.  Harvey  answers, 
"  France,  Belgium,  Italy,  Switzerland,  and  Greece." 
(P.  70.) 

"  Then,"  said  Mr.  Eustis,  "  the  Latin  Union,  Ger- 
many, and  the  United  States  had  by  free  coinage 
maintained  the  commercial  value  of  silver  (?)  at  par 
with  gold." 

"  Yes,"  replied  Mr.  Harvey. 

The  alleged  question  of  Mr.  Eustis  should  be  dis- 
missed for  indetiniteness.  Nobody  claims  the  com- 
mercial value  of  gold  and  silver  were  ever  the  same. 
What  Mr.  Harvey  intended  to  ask  himself  was  whether 
the  Latin  Union,  Germany,  and  the  United  States  had 
at  a  fixed  ratio  maintained  silver  and  gold  at  equal 
commercial  value — that  is  to  say,  worth  dollar  for 
dollar  the  world  over. 

To  this  question  Mr.  Harvey  answered  "  yes,"  and 
yet  he  must  have  known  that  his  answer  was  untrue, 
(1)  by  his  own  tables  of  statistics;  (2)  by  his  state- 
ment, page  10,  that  silver  in  France  was  "worth  $1.03^ 
when  exchanged  for  gold";   (3)  by  his  statement  on 


32  ANSWER  TO 

page  19,  to-wit,  "  at  the  time  the  United  States  de- 
monetized silver  .  .  silver  as  measured  in  gold  was 
worth  $1.02-';  (4)  by  his  admission  on  page  68  that 
silver  coin  had  sold  at  a  premium  of  eight  per  cent, 
over  gold;  (5)  by  the  statement  on  page  69  in  which 
he  says  '■'  on  account  of  th€  French  premium  for  silver 
our  silver  was  leaving  us";  (6)  by  his  assertion  on 
page  135  that  "  France  and  the  Latin  Union  main- 
tained a  premium  on  silver  for  forty  years.''  When 
an  individual  is  convicted  of  lying  out  of  his  own 
mouth  it  can  not  be  either  unparliamentary  or  unjust 
to  brand  him  a  liar.  It  is  in  this  manner,  at  any  rate, 
that  ministers  of  the  Gospel  characterize  Satan  when 
he  wilfully  indulges  in  falsehood. 

The  truth  is,  from  1810  to  1834  gold  virtually 
abandoned  the  tJnited  States,  because  it  was  under- 
valued, and  hence  for  24  years  was  at  a  premium, 
occasionally  as  high  as  4  to  4^  per  cent.  From  1834-5 
to  1861,  substantially,  all  American  silver,  except  the 
heavily-alloyed  minor  coins,  provided  for  by  the  act  of 
1853,  left  the  country,  and  during  this  period  silver 
bore  a  premium  over  gold. 

Mr.  Eustis,  still  eager  for  more  falsehoods,  asks : 
"  And  the  United  States  was  the  first  of  these  to 
attack  silver  and  demonitize  it? "     (P.  70.) 

"  Yes,"  Mr.  Harvey  answers. 

This  "  yes  "  was  as  untruthful  as  the  other.  There 
was  not  an  American  silver  dollar  in  the  United  States 
to  be  either  demonetized  or  attacked  in  1873,  and 
practically  had  not  been  one  for  nearly  40  years. 
Silver  here  was  worth  more  as  bullion  than  as  coin, 
and  hence  the  only  circulation  a  silver  dollar  could 
have  had  was  from  the  mint  to  the  melting  pot.  But 
on  still  another  ground  Mr.  Harvey's  answer  would 
have  been  false.  Germany  took  the  preliminary  steps 
toward  limiting  the  coinage  of  silver  December  4, 1871, 
and  completed  the  work  July  9, 1873.  The  first  attack 
by  the  countries  mentioned,  therefore,  was  made  on 
silver  in  1871. 

What  Mr.  Harvey  has  to  say  (pp.  70-71-72)  as  to 
the  probable  or  possible  value  of  gold  and  silver  in 
case  they  were  not  used  as  money,  has  no  relevancy 


"  COIN'S  FINANCIAL  SCHOOL."  33 

whatever  to  either  the  question  of  national  free  coin- 
age, or  international  free  coinage,  and  hence  in  this 
discussion  is  of  no  consequence  to  anj^body.  His 
pages  73  and  74,  as  to  the  cost  of  producing  silver,  are 
simply  tilled  with  ridiculous  verbiage.  The  idea  that 
the  money  wasted  by  Chicago  speculators  on  mining 
ventures  should  be  counted  in  an  estimate  of  the  cost 
of  silver  production  is  as  preposterious  as  it  would  be 
to  say  that  the  monej'-  paid  for  the  bogus  bricks  which 
swindlers  sell  to  ignorant  countrymen  for  gold  should 
be  counted  in  the  cost  of  producing  the  yellow  metal. 
His  reply  to  a  greenbacker  (pages  75-76)  is  a  weak 
attempt  to  discuss  an  abandoned  issue,  but  in  it  he 
accidentally  stumbles  on  an  actual  fact,  which  is  to  a 
certain  extent  just  as  applicable  to  his  independent 
free  coinage  50-cent  silver  dollars  as  to  paper  money. 
He  says  :  "  When  the  danger  became  imminent  that 
the  government  was  not  able  to  enforce  its  legal  tender 
character,  having  no  commercial  value,  it  (the  paper 
money)  would  become  more  or  less  worthless."  He 
might  truthfully  have  added  that  in  the  same  exigency 
the  silver  dollar  would  drop  to  its  commercial  value  — 
50  cents. 

In  fact,  a  currency  endowed  by  law  with  legal 
tender  force  beyond  its  commercial  value  often  becomes 
worthless,  or  comparatively  worthless,  while  the 
government  has  full  power  to  compel  its  acceptance 
in  the  payment  of  debts.  The  assignats  of  France, 
the  continental  currency  of  the  fathers,  the  money  of 
the  Confederate  states  fell,  and  continued  to  fall,  and 
while  this  gradual  extinction  of  value  was  in  progress 
continued  a  legal  tender  in  the  payment  of  debts  at 
the  nominal  or  face  value.  When  legal  tender  money 
like  that  of  the  Confederate  states  becomes  nearly,  if 
not  absolutely  valueless,  debts  are  easily  paid  and 
every  payment  is  an  act  of  robbery  authorized  and 
enforced  by  law. 

As  specimens  of  Mr.  Harvey's  financial  slush  let 
me  present  to  the  reader  two  paragraphs  from  page  77  : 

"Paper  money  always  takes  its  (redemption 
money's)  place  at  such  times  (war  times)  the  people^ 
however,  are  not  injured  by  it" — 


34  ANSWER  TO 

This  depends  wholly  upon  whether  the  paper 
money  issued  is  kept  at  par  with  the  money  of  the 
world.  If  it  falls  below  par  somebody  must  be  injured 
by  it,  and  if  it  becomes  altogether  worthless,  multi- 
tudes are  ruined  by  it. 

— "  They  (the  people)  store  away  their  good  money, 
and  have  it  in  their  possession  ready  to  use  at  any 
time  " — 

How  much  gold  and  silver  did  our  people  "store 
away  "  during  the  war  of  the  revolution  and  during 
the  great  civil  war  ?  How  much  was  found  stored 
away  in  the  South  when  the  rebellion  collapsed  ?  Not 
a  dollar. 

— "  and  it  becomes  especially  useful  if  the  other 
money  should  become  entirely  worthless." 

Of  course  good  money  would  be  "especially  use- 
ful "  if  there  were  any,  but  there  would  be  compara- 
tively none.  During  long  periods  of  depreciated  paper 
money  the  better  money  does  not  simply  go  into  hid- 
ing, but  the  bulk  of  it  goes  abroad.  In  war  times 
imports  exceed  exports,  and  the  balances  are  paid  not 
in  paper  money,  but  in  the  money  of  commerce.  In 
this  way  in  part,  and  by  the  activity  of  tJie  bullion 
buyer  in  part,  during  a  great  war  a  country  is  often 
stripped  of  its  better  money  and  left  to  depend  mainly, 
if  not  wholly,  upon  its  paper  currency.  When  this 
currency  becomes  ••'  entirely  worthless  "  the  wealth  of 
the  nation  is  diminished  to  the  full  extent  of  the  orig- 
inal value  of  the  currency  lost,  for  every  dollar  of  this 
currency  represented  at  one  time  or  another  100  cents 
worth  of  labor  or  of  commodities.  The  continental 
currency  of  the  fathers  and  the  paper  money  of  the 
Confederate  states  will  suggest  the  extent  of  the  losses 
sustained  by  the  people  by  reason  of  the  gradual  decay 
of  their  paper  money.  The  financial  condition  of  the 
fathers  at  the  end  of  the  Revolution,  and  of  the  Con- 
federate states  at  the  end  of  the  civil  war,  will  show 
that  no  good  money  had  been  stored  away  to  take  the 
place  of  paper  money  when  its  value  should  disappear. 
Indeed,  the  financial  condition  of  the  North  at  the 
close  of  the  war  will  fully  sustain  all  I  have  said  with 


"COIN'S  FINANCIAL  SCHOOL."  36 

respect  to  the  scarcity  of  gold  and  silver  in  the  country. 

— "As  the  paper  money  fluctuates  from  day  to  day 
all  are  taking  chances  alike  '' — 

False.  The  old  who  are  living  on  the  interest  of 
money  earned  in  their  more  vigorous  years ;  the  widow 
and  orphan  for  whose  support  provision  has  been  made 
by  investment  in  bond  or  note ;  the  workingman  who 
depends  for  subsistence  upon  his  daily  wages ;  the 
corporation  which  is  restricted  by  law  to  certain  rates 
or  charges  for  its  services ;  the  endowed  churches,  col- 
leges, hospitals,  etc.,  whose  incomes  are  derived  from 
interest-bearing  securities;  the  soldier  to  whom  pen- 
sion money  is  due;  the  man,  whether  rich  or  poor, 
who  has  loaned  money  on  mortgage,  or  otherwise ;  the 
man  who  has  sold  a  farm  or  house  and  lot,  and 
accepted  promissory  notes  for  the  deferred  payments ; 
all  these  and  multitudes  of  others  have  no  chance  at 
all  at  such  a  time,  except  the  chance  to  be  robbed,  and 
this,  soon  ceasing  to  be  a  chance,  becomes  a  certainty. 

— ''  If  it  (the  paper  money)  becomes  wholly  worth- 
less, all  have  suffered  more  or  less  proportionately"  — 

"  More  or  less  proportionately  "  is  at  least  some- 
what indefinite,  if  not  entirely  meaningless.  A  man 
sells  a  farm,  receiving  one-third  down  and  notes  for 
the  deferred  payments.  When  the  notes  mature  they 
are  paid  in  paper  worth  5  or  10  cents  on  a  dollar.  Do 
the  buyer  and  the  seller  in  this  case,  and  in  a  million 
other  similar  cases,  suffer  "  more  or  less  proportion- 
ately?" No.  The  seller  experiences  all  the  suffering, 
and  the  buyer,  who  gets  the  farm  for  comparatively 
nothing,  kicks  up  his  heels  for  joy.  In  fact,  there  is  no 
"  more  or  less  proportionately  "  involved  in  the  trans- 
action. I  fear  Mr.  Harvey's  mental  apparatus  at  this 
point  in  his  lecture  needed  readjusting.  His  likeness, 
on  page  26,  indicates  that  the  wheels  in  his  head  are 
"  more  or  less  proportionately "  large  and  small,  and 
hence  not  at  all  unlikely  to  get  "  more  or  less  propor- 
tionately" out  of  whack. 

—  "And  primary  money  immediately  takes  its 
place." — 


SQ  ANSWER  TO 

Was  this  the  case  when  John  Law's  paper  money 
bubble  exploded  in  France  in  1720  ?     Not  at  all.     Gold 
and  silver  had  abandoned  the  country,  and  hence  could 
not  immediately  take  the  place  of  the  worthless  paper. 
I  quote  from  a  history  of  that  time :  "A  few  individuals 
acquired   large  fortunes  while  thousands  of  families 
were  ruined,  and  the  nation  sustained  a  shock  which  it 
did  not  recover  from  for  many  years."     How  was  it 
when  the  continental  currency  became  valueless  ?    Did 
primary  money  rush  in  dollar  for  dollar  to  take  its 
place  ? '  Peletiah  Webster  said  the  continental  currency 
had  killed  more  men,  destroyed  more  property,  and 
impaired  the  patriot  cause  more  than  all  the  arms  and 
arts  of  the   enemy  combined.     How  was  it  when  the 
Confederate  money  became  worthless,  did  gold  and  sil- 
ver immediately  take  up  the  burden  for  which  it  had 
become  unfitted  ?     Nonsense.     If  there  had  been  a  live 
animal  exhibit  at  the  Chicago  World's  Fair  Mr.  Harvey 
would  have  been  decorated  with  the  blue  ribbon  for 
being  the  biggest  financial  ass  in  the  United  States. 

What  Mr.  Harvey  says  about  money  based  on  labor, 
pages  78,  79,  80,  I  shall  skip.     It  is  simply  thrust  in  to 
pad  out  a  thin  book,  and  has  no  relevancy  to  any  known 
issue  alive  or  dead.     His  statement  (p.  81)  that  the  sil- 
ver States  and  the  owners  of  silver  mines  would  not  be 
specially  benefited  by  a  scheme  which  would  enable 
them  to  convert  67  cents  worth  of  bullion  into  money 
enough  to  pay  129  cents  of  debts,  is  so  obviously  un- 
true that  I  pass  it  without  comment.     What  he  says  of 
the   relative  value  of  silver,  wheat,  nails  and  calico 
(p.  81)  I  shall  answer  in  due  time,  and  shall  then  have 
something  to  say  also  about  improved  facilities  for  pro- 
duction (p.  84).     The  tariff  proposition  (p.  85)  I  leave 
to  Mr.  Harvey  and  Mr.  Kohlsaat,  and  should  be  pleased 
to  see  the  contention  between  them  end  like  the  fight 
of  the  Kilkenny  cats.     But  Mayor  Hopkins  is  said  to 
have  asked  a  question  (p.  88)  to  which  I  desire  to  give 
a  moment's  attention.     The  question  is  this: 

*'  What  effect  (had)  the  adoption  of  the  gold  stand- 
ard (by  governments)  on  those  nations  using  a  silver  or 
bimetallic  standard  ? " 


"COIN'S  FINANCIAL  SCHOOL."  g7 

Mr.  Harvey's  answer  in  part,  but  substantially  in 
whole,  is  as  follows  (p.  89) : 

"  Take  our  South  American  republics.  During  the 
last  thirty  j^ears  they  have  been  getting  deeper  and 
deeper  into  debt  to  England  "  — 

Is  it  not  strange  that  Englishmen  who  lack  the  wit 
to  comprehend  and  apply  Mr.  Harvey's  so-called  prin- 
ciples of  finance  should  still  have  wit  enough  to  outwit 
our  South  American  free  coinage  silver  republics? 

— "And  during  the  last  twenty-five  years  these 
debts  have  been  made  payable  in  gold  "  — 

England  has  been  on  a  gold  basis  not  for  twenty-five 
years  only,  but  for  seventy-five,  and  during  this  time  all 
debts  have  been  paid  to  her  either  in  gold  or  in  what  was 
equivalent  to  gold.  There  has  been  no  shortening  nor 
lengthening  of  her  measure  of  values.  If  independent 
free  coinage  has  plunged  these  South  American  repub- 
lics into  distress,  would  it  not  be  well  for  us  to  avoid 
independent  free  coinage?  If  gold  and  the  restricted 
coinage  of  silver  has  given  England  access  to  all  ports 
and  made  lier  the  foremost  commercial  nation  of  the 
world,  would  it  not  be  well  for  us  to  draw  a  lesson  from 
her  experience  and  adhere  to  the  free  coinage  of  gold 
and  the  limited  coinage  of  silver?  Shall  we  follow  the 
example  of  the  successful  or  the  unsuccessful  ? 

Now  to  recapitulate : 

1.  Mr.  Harvey's  attempt  to  account  for  the  pre- 
mium on  silver  coin  on  the  pretense  that  there  was  "  a 
scarcity  of  small  money,"  is  a  failure. 

2.  His  statement  that  the  Latin  Union,  Germany 
and  the  United  States  had  at  a  fixed  ratio  maintained 
silver  and  gold  on  a  parity  with  each  other,  is  shown  to 
be  false  by  his  own  statements. 

3.  The  danger  and  loss  which  he  alleges  might  en- 
sue from  governmental  issue  of  paper  money,  would  re- 
sult as  certainly  but  with  simply  diminished  force  from 
the  independent  free  coinage  of  silver. 

4.  Paper  money  may  become,  and  often  has  be- 
come, almost  wholly  worthless,  while  the  government 
issuing  it  still  exercised  power  to  compel  its  accept- 
ance in  payment  of  debts. 

389206 


38  ANSWER  TO 

5.  When  depreciated  paper  money  is  a  legal  ten- 
der in  the  payment  of  debts  at  its  face  value,  better 
money  leaves  the  country,  and  this  would  be  the  case  if 
independent  free  coinage  were  adopted  and  silver  dol- 
lars issued  worth  less  than  100  cents  in  the  markets  of 
the  world. 

6.  When  the  money  of  a  country  depreciates  in 
value,  the  people  of  the  country  sustain  a  loss  equal 
at  least  to  the  full  amount  of  the  depreciation.  In 
other  words,  if  $1,000,000  of  currency  should  decline 
from  par  to  nothing,  the  direct  loss  to  the  people  would 
be  $1,000,000,  and  the  indirect  loss  resulting  from  em- 
barrassed trade,  etc.,  might  amount  to  a  still  larger 
sum. 


REVIEW  OF  PART  OF  FIFTH  CHAPTER. 


yy^^^HE  TOTAL  value  of  the  properly  of  the  world  is 
\J  ^  about  450,000  million  dollars.  The  available 
^"^  gold  and  silver  money  of  the  world  combined 
is  about  7,500  million  dollars.  The  available  gold 
money  in  the  world  is  about  3,700  million  dollars." 
On  page  98  Mr.  Harvey  concedes  that  the  amount  of 
gold  money  may  be  3,900  million  dollars — "Their  pro- 
portion in  values  to  each  other  is  represented  by  these 
three  globes  .  .  .  the  large  one  represents  the  value 
of  all  the  real  and  persoiuil  property  in  the  world, 
the  larger  of  the  two  small  ones  represents  the  face 
value  of  the  silver  and  gold  in  the  world  available 
for  use  as  money.  The  large  one  is  sixty  times  as  large 
as  the  one  representing  silver  and  gold."    (P.  95.) 

No  one  can  know  definitely  the  money  value  of  the 
real  and  personal  property  of  the  world.  Statisticians 
give  the  land  value,  house  value,  and  other  values  for 
the  better  known  portions  of  the  globe,  but  Asia,  Af- 
rica, sections  of  South  America,  and  many  of  the  islands 
of  the  seas  afford  no  data  upon  which  anything  like  ac- 


"COIN'S  FINANCIAL  SCHOOL."  39 

curate  estimates  can  be  founded.  When  Mr.  Harvey, 
therefore,  says  the  total  value  of  all  the  property  of  the 
world  is  about  450  billions,  he  may  or  may  not  have 
erred  to  the  extent  of  50  billions  either  way ;  but  this 
insignificant  sum  is  of  course  of  no  consequence  to  one 
whose  marvelous  genius  can  double  the  value  of  the 
property  of  the  world  by  simply  endowing  50  cents  with 
the  name  and  legal  tender  power  of  a  full  dollar,  and 
as  I  am  myself  not  disposed  to  higgle  about  trifles,  I 
shall  accept  his  estimate,  and  count  the  earth  and  its 
contents  worth  450  billions  of  gold  and  silver  money. 

How  much  gold  and  silver  there  was  in  use  as 
money  prior  to  1493  it  is  impossible  to  tell.  We  know, 
however,  the  metals  have  from  time  immemorial  been 
considered  precious,  and  that  they  are  comparatively 
imperishable,  and  hence  likely  to  accumulate.  Cyrus's 
booty  from  Asia  in  gold  and  silver  amounted  in  value 
to  $40,000,000.  Alexander  took  I'rom  Persia  $400,000- 
000.  Julius  Cassar  seized  in  the  Roman  treasury  520 
tons  of  gold  and  700  tons  of  silver,  together  worth 
$375,000,000.  What  amount  of  gold  and  silver  of 
that  old  time  descended  to  the  people  of  modern  days, 
no  statistician  can  determine.  From  1493  to  1850, 
however,  we  have  estimates,  not  altogether  well 
founded,  as  to  the  amount  of  gold  and  silver  produced, 
which  for  lack  of  anything  more  reliable,  statisticians 
accept,  and  and  from  1850  to  the  present  time  the  esti- 
mates of  gold  and  silver  production  are  substantially 
correct.     The  figures  for  these  periods  are  as  foliows : 


From  1493  to  1850 


I  Gold $3,314,553,000 

•  ■  ]  Silver 7,378,450,000 

t?  i«^n.     i«Q^  jGold 5,484,473.000 

From  1850  to  1893 |  gjj^^^ 3,381,017,000 


Total      .    $19,558,493,000 

How  much  of  the  gold  and  silver  produced  prior  to 
1493  and  su})sequent  to  that  year  is  now  being  used  as 
money  must  he  loft  mainly  as  a  matter  of  conjecture. 
Men  do  not  (endanger  their  lives  by  boasting  of  their 
treasures,  jior  encourage  tax  inquisitors  by  exhibiting 
the  contents  of  either  stocking  legs  or  strong  boxes. 


40  ANSWER  TO 

The  amount  of  the  precious  metals  coined  into  money 
within  the  past  200  years  may  perhaps  be  a  matter  of 
record,  but  this,  even  if  certainly  known,  would  not  en- 
lighten us  as  to  the  amount  now  in  circulation,  for  coin 
is  often  smelted  for  use  in  the  arts,  or  reduced  to  bullion 
and  recoined.  It  is  known,  of  course,  how  mu  ch  gold 
and  silver  there  is  in  governmental  depositories  and 
public  banks ;  but  further  than  this  it  is  impossible  to 
speak  with  certainty.  According  to  recent  estimates, 
however,  the  stock  of  the  world's  gold  and  silver  money 
is  as  follows : 

Gk)ld  coin 1 3,965,900,000 

Silver  coin 4,055,700,000 

Total ; . . .  $  8,021,600,000 

Having  said  this  much  by  way  of  preface,  permit 
me  to  call  attention  again  to  Mr.  Harvey's  globes  (p. 
95)  and  to  his  statements  with  respect  to  them. 

The  property  of  the  whole  world,  real  and  personal, 
is  by  the  globes  represented  as  60  times  more  valuable 
than  money,  and  yet  on  pages  56, 57  and  58  Mr.  Harvey 
seemed  oblivious  to  the  fact  that  there  existed  a  broader 
and  more  substantial  foundation  for  the  credit  system 
than  money.  In  other  words,  he  then  erroneously  as- 
sumed that  money  and  not  the  property  of  the  world 
was  the  basis  of  the  credit  system,  and  that  it  was  too 
limited  in  quantity  to  afford  that  system  the  necessary 
support  Now  he  seeks  to  show  that  the  quantity  of 
money  is  too  small  to  measure  the  value  of  the  world's 
commodities  and  facilitate  their  exchange.  His  first 
proposition  had.  as  I  have  shown,  no  leg  to  stand  upon ; 
and  the  last,  as  I  shall  show,  has  not  even  a  shadow  to 
sustain  it. 

On  page  54  Mr.  Harvey  said  :  "  Money  is  a  measure 
of  value,  and  each  dollar  is  a  part  of  that  measure." 
Now,  as  a  measure  of  value,  let  us  see  whether  the  gold 
and  silver  of  the  world  are  sufficient  to  measure  the 
property  of  the  world.  If  the  farmer's  crop  of  wheat 
were  but  sixty  times  larger  than  his  bushel  measure,  it 
would  be  less  than  an  hour's  task  for  him  to  measure  it. 
If  the  amount  of  wheat  were  even  500  times  larger  it 


"COIN'S  FINANCIAL  SCHOOL."  41 

would  perhaps  require  two  days  to  measure  it  with  one 
bushel  measure.  The  merchant  does  not  require  as 
many  j'^ardsticks  as  he  has  yards  of  cloth ;  nay,  one 
yardstick  is  more  than  sufficient  for  60  or  f)00  or  6,000 
yards  of  cloth.  It  would  be  preposterous  to  suppose 
that  the  wine  merchant  required  one  gallon  measure 
for  every  sixty  gallons  of  wine  in  his  cellar.  If  Mr. 
Harvey's  statement  is  correct  that  the  property  of  the 
world  is  but  sixty  times  larger  in  value  than  the  money 
of  the  world,  it  would  indicate  that  the  measure  of 
value  would  have  not  only  a  light  task  to  perform,  but 
much  leisure. 

The  measuring  quality  of  money,  however,  is  not  its 
only  attribute.  It  is  also  a  medium  of  exchange ;  but 
before  we  consider  whether  the  money  of  the  world  is 
sufficient  in  quantity  to  facilitate  the  exchanges  of  the 
world,  let  us  examine  the  property  globe,  which  is  sixty 
times  larger  than  the  money  globe,  and  see  just  how 
much  of  its  contents  requires  the  use  of  money. 

In  the  first  place,  money  itself  is  a  part  of  the  prop- 
erty of  the  world,  and  yet  needs  no  money  to  facilitate 
its  exchange;  by  excluding  this  from  the  property 
globe,  the  latter  will  shrivel  somewhat.  In  the  second 
place,  the  lands,  houses  and  lots  of  the  world  seldom 
change  hands,  and  hence  make  comparatively  little,  if 
any,  demand  on  money;  these  will  amount  in  value  to 
over  200  billions.  Withdraw  this  sum  from  Mr.  Har- 
vey's larger  globe  and  it  is  left  limp  and  lopsided,  like 
a  balloon  from  which  the  gas  is  rapidly  escaping.  But 
this  is  not  all,  the  value  of  the  railroads,  ships  upon  in- 
land and  outland  seas,  the  contents  of  museums,  gal- 
leries of  art,  libraries,  the  looms,  spindles  and  imple- 
ments of  manufacture,  furniture  in  offices  hotels  and 
houses,  the  silver  and  gold  plate,  pictures  and  statuary 
of  all  the  homes  of  the  world,  the  products  of  farms  and 
gardens  consumed  by  those  who  raise  them,  beasts  of 
burden,  milch  cows,  and  animals  kept  for  breeding  pur- 
poses, and  hence,  as  a  rule,  not  offered  for  sale,  farm 
implements,  etc.;  all  these  would  amount  in  value  to 
probably  40  billions.  We  have  then  8  billions  of  money, 
200  billions  in  lands,  houses  and  lots,  and  40  billions 


42  ANSWER  TO 

consisting  of  railroads  and  personalty  of  various  kinds ; 
altogether  248  billion  dollars  worth  of  property,  which 
should  be  withdrawn  from  Mr.  Harvey's  property 
globe,  because  not  on  the  market  and  hence  neither  in 
need  of  money  to  measure  values,  nor  facilitate  ex- 
changes. 

The  property  in  the  property  globe  for  the  exchange 
of  which  money  may  be  required,  is  now  only  about 
half  as  large  as  it  was,  and  but  thirty  times  greater  in 
value  than"  money.  But  there  is  still  another  impor- 
tant factor  in  this  problem,  which  Mr.  Harvey  failed 
to  take  into  account,  to- wit :  the  fact  that  in  commercial 
iountries  ninety-five  per  cent,  of  the  exchanges  are 
effected  by  means  of  checks,  drafts,  bills  of  exchange, 
and  the  other  commercial  instrumentalities  which 
hanks  supply,  and  that  actual  money  is  only  needed 
to  adjust  balances.  One  day  last  month  drafts  callinar 
for  one  hundred  and  forty-eight  million  dollars  went 
through  the  New  York  Clearing  House,  and  yet  nine 
million  dollars  in  greenbacks,  treasury-'notes.  national 
bank  notes,  or  gold  and  silver  coin  adjusted  the  bal- 
ances, and  was  the  only  actual  money  needed  in  the 
payment  of  drafts  or  other  obligations  calling  for  one 
hundred  and  forty-eight  million  dollars.  The  checks 
on  banks  of  Columbus  which  go  through  the  Clearing 
House  aggregate  three  to  four  million  dollars  a  week, 
and  yet  they  offset  each  other  so  nearly  that  often  a 
whole  week,  and  sometimes  a  whole  fortnight,  passes 
without  a  single  dollar  of  paper  or  metal  money  chang- 
ing hands.  The  balances  involved  being  small,  the 
creditor  banks  do  not  go  to  the  trouble  of  collecting 
them,  and  hence  run  their  Clearing  House  checks 
through  the  Clearing  House  until  in  the  course  of 
business  they  are  cancelled.  In  this  way  $3,000,000 
or  more  of  debts  are  paid  or  commodities  purchased 
without  the  actual  use  of  a  dollar  of  any  kind  of 
money. 

Take  ninety-five  per  cent,  therefore,  from  the  202 
billion  dollars "^still  remaining  in  Mr.  Harvey's  globe 
and  we  have  left  but  little  over  10  billion  dollars' 


"COIN'S  FINANCIAL  SCHOOL."  48 

worth  of  property  for  the  exchange  of  which  actual 
money  may  be  required. 

Again  there  is  another  factor  in  this  problem  which 
Mr.  Harvey  has  ignored,  to-wit,  the  element  of  time. 
Commodities  are  not  all  offered  for  sale  on  any  single 
day,  week,  month  or  year.  The  value  of  money  is  not 
extinguished  when  it  extinguishes  a  debt  or  facilitates 
an  exchange.  One  thousand  dollars  may  in  the  course 
of  a  month  pay  a  million  dollars  of  indebtedness,  or 
facilitate  exchanges  aggregating  a  million  dollars  in 
value,  and  still  be  as  fresh  and  useful  as  before  this 
work  was  accomplished.  If  all  the  450  billion  dollars' 
worth  of  property  of  the  world  were  sold  and  bought 
each  year  it  would  be  quite  possible  for  the  present 
supply  of  money  under  present  conditions  of  credit, 
rapid  transit,  and  telegraphic  communication  to  per- 
form the  work  with  ease. 

Let  us  for  illustration  make  a  somewhat  violent  as- 
sumption, to-wit,  that  8  billion  dollars  of  the  world's 
metallic  money  could  be  made  available  in  the  settle- 
ment of  8  billion  dollars'  of  balances  in  a  single  day. 
By  multiplying  8  by  300  business  days  in  a  year  we 
should  then  get  the  total  of  the  balances  which  this 
8  billion  dollars  would  adjust,  300x8  =  2,400  billion, 
or  over  five  times  more  than  the  estimated  value  of  all 
the  property  of  the  world.  This  2,400  billions,  how- 
ever, being  only  five  per  cent,  of  the  total  transactions, 
we  should  add  to  it  ninety-five  per  cent.,  the  latter 
being  the  percentage  of  means  which  banks  and  sub- 
stitutes for  money  supply  in  effecting  exchanges,  and 
we  have  the  sum  total  of  exchanges  possible  to  be 
made  under  this  assumption  on  a  basis  of  8  billions  of 
primary  money,  to-wit,  48,000  billions.  Mr.  Harvey's 
beggarly  450  billions  of  property,  therefore,  sinks  into 
insignificance  when  contrasted  with  the  possible  power 
to  effect  exchanges  possessed  by  money  supplemented 
and  directed  by  the  commercial  genius  of  the  age. 
But  let  us  assume  that  the  8  billions  of  the  world's 
metallic  money  would  adjust  but  8  billions  in  balances 
each  week,  the  sum  total  of  balances  adjusted  in  this 
case   would    be  416    billions.     An   adjustment   of   8 


44  ANSWER  TO 

billions  per  month  would  be  96  billions  per  year,  and 
this  would  represent  transactions  aggregating  1,900 
billions.  Mr.  Harvey  should,  therefore,  multiply  his 
22  cubic  feet  of  gold  (p.  101)  and  his  66  cubic  feet  of 
silver  (p.  104)  by  300,  by  52  or  by  12,  and  so  obtain  a 
reasonably  correct  notion  of  the  power  of  money  not 
only  as  a  measure  of  values,  but  as  a  medium  of  ex 
change,  and  if  his  brain  is  large  enough  to  allow  a 
robust  idea  to  develop  in  it  he  will  in  the  way  sug- 
gested get  to  understand  the  true  function  of  money 
and  the  relation  it  bears  to  the  commodities  of  the 
world. 

Money  never  becomes  scarce  while  the  honesty  and 
solvency  of  men  remain  unquestioned.  In  times  of 
fear  and  distrust  occasioned  by  threats  of  repudiation, 
or  an  absence  of  high  commercial  honor,  it  goes  forth 
eagerly  but  cautiously,  as  the  dove  from  the  ark,  to 
see  if  there  is  any  solid  ground  on  which  to  alight. 
Money  was  never  so  abundant  in  the  history  of  the 
world  as  it  is  to-day.  Since  1873,  the  world's  stock  of 
gold  has  been  increased  to  the  extent  of  $  2,382,000,000, 
while  the  silver  coin  of  the  world  is  also  greater  than 
it  was  then. 

Suppose  a  self-assumed  wise  man  should  make  the 
discovery  that  the  wheat,  corn,  beans,  rice,  potatoes, 
turnips,  and  onions  of  the  world  amounted  altogether 
to  450  billion  bushels,  and  that  there  were  only  8 
billion  bushel  measures  to  measure  these  products  in, 
would  you  become  apprehensive  that  there  was  a  lack 
of  measures  in  the  world  ?  But  now  suppose  this 
alleged  wise  man  were  to  tell  you  the  only  way  to 
avoid  starvation  was  to  double  the  number  of  bushels 
of  the  products  named,  and  that  this  could  be  done  by 
cutting  the  old  bushel  measure  in  two,  and  thereafter 
calling  a  half  bushel  a  bushel;  what  would  you  say  to 
the  proposition?  You  would  say  the  man  who  made 
it  was  a  fool.  This  is  substantially  what  Mr.  Harvey 
proposes  to  do  for  the  United  States.  He  proposes  to 
call  a  half  dollar  a  dollar  and  so  double  the  value  of 
the  property  of  the  United  States,  "  as  expressed  in 
dollars."     (P.  96.)     Would  there  be  more   property 


•'  COIN'S   FINANCIAL  SCHOOL."  45 

after  it  was  done  than  before?  Not  a  cent's  worth. 
No  more  farms,  no  more  grain,  no  more  merchandise, 
no  more  trade  or  commerce,  no  more  of  anything. 
If  Mr.  Harvey  thinks  the  name  of  a  thing  is  the 
essence  of  the  thing,  why  not  go  to  the  logical  end  of 
his  tether  by  endowing  a  cent  with  the  name  and  legal 
tender  power  of  a  dollar,  and  so  elevate  the  prices  of 
commodities  a  thousand  per  cent,  instead  of  one  hun- 
dred ?  If  he  seeks  some  metal  for  use  as  money  that 
will  occupy  more  space  than  gold  and  silver,  let  him 
adopt  iron.  He  could  fill  a  forty-acre  lot  with  pig 
iron  and  pile  it  twenty-two  feet  high,  or  even  one 
hundred  feet  high.  Steel  dollars  would  be  durable, 
and  by  the  change  of  one  letter  they  could  be  made 
to  designate  the  purpose  Mr.  Harvey  seeks  to  accom- 
plish, to-wit,  steal  dollars. 

Money  is  money,  and  our  money  should  be  the 
money  of  the  world,  good  at  home  and  abroad.  Wher- 
ever on  the  globe  an  American  dollar  might  find  its 
way,  it  should  represent  a  sturdy  people  — disposed  to 
toe  the  mark,  to  do  as  they  agreed,  to  pay  their  debts, 
and  ask  odds  of  nobody.  Mr.  Harvey  would  make 
Americans  sneaks,  swindlers  and  thieves,  indifferent 
alike  to  the  honor  of  the  nation  and  their  own  personal 
obligations.  He  talks  about  war  with  England  and 
tells  us  what  a  good  thing  it  would  be.  This  was  Dick 
Turpin's  style,  and  that  of  the  late  Jesse  James. 
Every  bandit  and  robber  seeks  a  war  with  somebody 
because  he  wants  to  plunder  somebody. 

In  conclusion  permit  me  to  call  attention  to  a  para- 
graph which  is  suggestive  of  either  inebriety  or  insanity : 

"  In  what  language  can  we  characterize  the  men 
behind  the  scenes,  who  knowingly  are  directing  the 
world  to  the  gold  standard  ?  .  .  .  .  Imps  of  Hell 
unchained,  banqueting  in  selfish  glee  upon  the  heart's 
blood  of  the  world."     (  F.  103.) 

If  there  are  any  benevolently  disposed  persons  in 
Chicago,  I  trust  they  will  keep  an  eye  on  Mr.  Harvey ; 
he  evidently  needs  at  times  either  the  admonitions 
of  a  police  magistrate,  or  the  straight  jacket  of  an 
asylum  for  lunatics. 


46  ANSWER  TO 


FIFTH  CHAPTER  —Continued. 


*NTiL  1873  the  primary  money  of  the  world  was 
both  silver  and  gold  at  a  parity."  (  P.  106.) 
I  have  already  shown  that  this  statement  is 
untrue,  but  in  a  few  words,  and  by  Mr.  Harvey's  own 
admissions,  its  untruthfulness  will  be  exposed  a  second 
time.  That  gold  and  silver  were  not  *'at  a  parity"  Mr. 
ilarvey  admits  on  page  10,  when  he  says,  "  silver  in 
France  was  worth  $1.0S|  when  exchanged  for  gold"; 
page  19,  "silver  measured  in  gold  (in  the  United 
States)  was  worth  $1.02";  page  69,  "on  account  of 
the  French  premium  our  silver  was  leaving  us";  page 
136,  "France  and  the  Latin  Union  maintained  a  pre- 
mium on  silver  for  forty  years." 

— "  They  were  virtually  one  metal  " — 

He  has  himself  shown  they  were  virtually  two 
metals  in  the  sense  that  under  independent  free  coinage 
they  could  neither  be  maintained  at  a  parity  nor  kept 
in  circulation  together. 

"  The  demand  for  primary  money  was  met  by  both 
metals" — 

Prior  to  1873  the  demand  for  primary  money  was 
not  met  by  the  coin  of  both  metals.  On  the  contrary, 
it  was  always  met  by  the  cheaper  metal — by  the  metal 
which  was  a  legal  tender  for  more  than  its  commercial 
value. 

— "The  relative  valuations  of  property  to  money, 
and  money  to  property,  adjusted  themselves  accord- 
ingly "— 

If  Mr.  Harvey  means  that  the  value  of  commod- 
ities was  always  estimated  in  gold  and  silver,  and 
neither  in  gold  alone,  nor  in  silver  alone,  nor  in  green- 
backs alone,  nor  in  irredeemable  paper  money  alone, 
he  knows  little  of  the  monetary  history  of  his  own 


"  COIN'S  FINANCIAL  SCHOOL."  47 

country  and  less  of  that  of  the  world  at  large.  In  the 
United  States  from  near  1792  to  1834-5  the  value  of  all 
property  was  measured  in  silver,  because  it  was  the 
cheaper  money.  From  1834-5  to  1861  the  standard  of 
measurement  was  gold  because  gold  was,  during  this 
period,  the  cheaper  money.  From  1861-2  to  1879 
greenbacks  constituted  the  currency  in  which  the  prices 
of  commodities  were  quoted  in  the  north,  and  for  a 
part  of  this  time  Confederate  money  was  the  measure 
of  value  and  the  medium  of  exchange  in  the  South. 
It  should  be  remarked  in  this  connection  also  that 
England  limited  the  coinage  of  silver  in  1816,  and  that 
India,  Austria-Hungary,  Persia,  China,  Japan,  and 
Mexico  were  on  a  silver  basis  prior  to  1873,  and  that  in 
the  countries  named  gold  and  silver  could  not  possibly 
have  been  "virtually  one  metal,"  and  hence  the 
sentence  we  are  considering  must  be  either  false  or 
wholly  meaningless. 

— "Then  we  had  dollar  wheat  and  sixteen  cent 
cotton  in  bimetallic  measurement." — 

In  the  United  States  we  have  often  had  dollar 
wheat  and  once  before  the  war  15:^-cent  cotton;  but  we 
never  had  either  dollar  wheat  or  cotton  at  any  price  in 
bimetallic  measurement  prior  to  the  resumption  of 
specie  payments  in  1879. 

The  work  of  pointing  out  line  by  line  Mr.  Harvey's 
inaccuracies  of  statement,  erroneous  conclusions  and 
general  disregard  for  truth,  would  not  onl}'^  be  almost 
endless,  but  exceedingly  dull  and  wearisome.  The  gist 
of  his  contention  now  is  that  since  the  so-called  de- 
monetization of  silver  in  1873,  wheat  and  cotton 
(  p.  108-113),  cut  nails  (  p.  114),  pig  iron  (  p.  114-115), 
wool  (  p.  115  ),  have  fallen  in  price  and  that  "  all  other 
values  have  declined  like  "  the  values  of  the  commodi- 
ties named,  and  that  "  prices  were  not  as  low  in  1859, 
or  prior  to  the  war,  as  they  are  now."     (P.  116.) 

This  alleged  general  decline  in  prices  Mr.  Harvey 
attributes  wholly  to  the  appreciation  of  gold  since  1873. 
Before  we  seek  to  ascertain  whether  his  contention  is 
well  founded,  or  otherwise,  let  us  state  the  question 
clearly.     It  is  this  :     Have  prices  declined  since  1873, 


48  ANSWER  TO 

and,  if  so,  is  this  decline  attributable  wholly  or  in  part 
to  the  so-called  demonetization  of  silver  and  the 
alleged  appreciation  of  gold  ? 

In  the  outset  it  is  admitted  that  some  things  have 
declined  in  price  by  reason  of  the  use  of  improved 
machinery,  the  lessened  cost  of  production  and  more 
abundant  supply.  On  the  other  hand,  it  is  affirmed 
that  some  things  have  not  declined  in  price  at  all,  and 
it  is  emphatically  denied  that  anything  has  declined 
in  price  on  account  of  an  alleged  appreciation  of  gold, 
or  that  there  has  been,  since  1873,  any  appreciation  in 
the  value  of  gold  by  which  prices  could  be  affected  in 
any  degree  whatever. 

Wheat  is  the  commodity  to  which  Mr.  Harvey  calls 
special  attention.  Is  it  not  just  as  fair  and  reasonable 
to  attribute  the  high  price  of  wheat  to  a  depreciation 
of  gold  as  to  attribute  the  low  price  of  wheat  to  an 
appreciation  of  gold  ?  If  not,  why  not?  Wheat,  within 
the  past  thirty  days,  has  advanced  30  cents  a  bushel,  or 
60  per  cent.  Has  gold,  within  the  past  thirty  days,  de- 
preciated 60  per  cent?  The  truth  is,  Mr.  Harvey  is 
untruthful,  inconsistent,  and  illogical.  He  talks  much 
about  the  law  of  supply  and  demand,  but  in  argument 
does  not  recognize  its  influence  on  business,  trade  or 
commerce.  He  is  crazy  on  the  subject  of  money.  Wars, 
pestilences  and  famines ;  fruitful  and  unfruitful  seasons 
abundance  and  scarcity ;  improved  methods  of  produc- 
tion ;  cheaper  and  quicker  means  of  distribution  have- 
in  his  perverted  judgment,  no  effect  on  prices.  In 
brief,  he  is  a  conspicuous  member  of  that  class  of  men 
who  are  a  curse  to  their  friends  and  a  blessing  to  their 
enemies.  The  farmers  of  the  Western  States  who 
were  beguiled  by  the  empty  verbiage  of  his  trashy 
book  into  the  belief  that  the  price  of  wheat  in  some 
way  depended  upon  the  price  of  silver  bullion,  and 
who,  on  the  strength  of  thiis  absurdity,  hurried  their 
wheat  to  market,  must  now  realize  that  they  have  lost 
from  60  to  70  per  cent,  of  the  value  of  their  crop ; 
while  those  who  put  no  dependence  upon  Mr.  Harvey's 
rotten  nonsense,  have  made  what  the  farmers  lost, 
to-wit :    Fifty  million  or  more  dollars  worth  100  cents 


'•  COIN'S  FINANCIAL  SCHOOL."  49 

each.  No.  1  wheat  is  quoted  in  New  York  to-day  at 
85f  cents  a  bushel ;  in  Milwaukee  at  82^  cents,  and  No. 
2  is  quoted  in  Toledo  at  80  cents.  Wheat  is  now  over 
19  cents  per  bushel  higher  than  it  was  in  December, 
1860 ;  20  cents  per  bushel  higher  than  it  was  in  Janu- 
ary, 1862.  In  real  money  it  is  25  per  cent,  higher  than 
it  was  in  December,  1865,  and  in  real  money  it  is  as 
high  as  it  was  in  November,  1872,  four  months  before 
the  so  called  "crime  of  1873  "  was  perpetrated. 

Prices  are  at  times  either  temporarily  depressed  or 
elevated  by  the  operations  of  reckless  speculators  ;  but 
as  a  rule  prices  rise  and  fall  in  unison  with  men's 
estimates  of  the  present  and  prospective  supply  and 
the  present  and  prospective  demand.  If  since  1873 
property  has  been  standing  still  and  gold  going  up 
(p.  109)  the  evidences  of  it  should  be  apparent  in  the 
market  quotations  of  every  year  subsequent  to  the  one 
named,  and  in  every  year,  also,  prior  to  that  time.  Let 
us,  therefore,  take  the  highest  and  lowest  prices  at 
which  wheat  was  sold  in  Chicago  during  certain  years, 
and  see  whether  the  prices  and  the  fluctuation  in 
prices  indicate  that  gold  is  and  has  been  appreciating 
in  value 

BEFORE    THE    WAR. 

In  April,  1860,  wheat  sold  for  $1.13  a  bushel. 

In  December,  1860,  wheat  sold  for  66  cents  a  bushel. 

WAR   PRICES. 

In  January,  1862,  wheat  sold  for  65  cents  a  bushel. 
In  August,  1862,  wheat  sold  for  92^  cents  a  bushel 

AFTER   THE    WAR,    IN   DEPRECIATED   PAPER    MONEY. 

In  February,  1866,  wheat  sold  for  77  cents  a  bushel. 
In  November,  1866,  wheat  sold  for  $2.03  cents  a 
bushel. 

In  April,  1870,  wheat  sold  for  73^  cents  a  bushel. 
In  July,  1870,  wheat  sold  for  $1.31^  a  bushel. 
In  July,  1873,  wheat  sold  for  $  1.46  a  bushel. 
In  September,  1873,  wheat  sold  for  89  cents  a  bushel. 


50  ANSWER  TO 

IN  MONEY   AT   PAR  WITH   GOLD. 

In  January,  1879,  wheat  sold  for  81f  cents  a  bushel. 

In  December,  1879,  wheat  sold  for  $  1.33^  a  bushel. 

In  January,  1880,  wheat  sold  for  $  1.32  a  bushel. 

In  August,  1880,  wheat  sold  for  86^  cents  a  bushel. 

In  January,  1881,  wheat  sold  for  95f  cents  a  bushel. 

In  October,  1881,  wheat  sold  for  $1,435  a  bushel. 

In  April  and  May,  1882,  wheat  sold  for  $  1.40  a 
bushel. 

In  December,  1882,  wheat  sold  for  91^  cents  a 
bushel. 

From  these  figures  two  conclusions  are  unavoidable. 
First,  that  the  prices  of  wheat  do  not  follow  the  rise 
and  fall  of  silver ;  second,  that  the  prices  of  wheat  do 
not  indicate  any  appreciation  in  the  value  of  gold. 

THE    world's    production    OF    WHEAT    IN    BUSHELS. 

1889 2,137.000,000 

1890 2,304,000,000 

1891 2,425,000,000 

1892 2,438,000,000 

1893 2,621,000,000 

1894 2,566,000,000 

The  increase  since  1889  has  been  constant.  Europe 
needs  but  140,000,000  bushels  more  than  she  raises  to 
feed  her  people,  and  yet  in  1894  there  was  an  increase 
in  the  wheat  crop  of  the  world  of  429,000,000  bushels 
over  the  abundant  crop  of  1889,  and  at  the  same  time 
large  amounts  had  been  left  over  from  the  plentiful 
crops  of  1892  93.  How  could  we  expect  wheat  to  be 
iiigh  under  such  conditions  ? 

I  have  not  the  statistics  before  me  to  prove  the  fact, 
but  I  doubt  not  it  is  a  fact  susceptible  of  proof  that 
the  farmers  of  Ohio  and  of  the  Western  States  have 
made  much  more  money  on  their  wheat  crops  since 
1873  than  they  realized  from  their  wheat  crops  for  the 
twenty-two  years  prior  to  1861.  With  the  help  of 
recently  invented  or  improved  machinery,  such  as 
^rain  drills,  reapers,  binders  and  threshers,  etc.,  they 
ire  not  only  enabled  to  raise  more  wheat  than  they 


"  COIN'S  FINANCIAL  SCHOOL."  51 

did  in  the  earlier  time,  but  to  raise  it  at  much  less  cost 
per  bushel,  and  to  transport  it  to  market  at  from  one- 
sixth  to  one-half  the  old  freight  charges.  The  freight 
rate  now  on  American  railways  is  about  8  mills  per 
ton  per  mile,  and  transportation  by  water  is  still 
cheaper.  At  one  time  in  Ohio,  within  my  recollection, 
farmers  of  Marion,  Delaware,  Morrow  and  Knox  coun- 
ties would  haul  wheat  to  Sandusky,  and  with  the 
proceeds  of  a  wagon  load  get  barely  enough  money  to 
buy  a  side  of  sole  leather,  a  barrel  of  salt  and  a  bolt  of 
brown  muslin.  Much  of  what  appeared  in  the  quoted 
prices  of  wheat  in  New  York  and  Baltimore  during  the 
forties  and  fifties,  was  made  up  of  freight  charges  and 
commissions  to  middlemen.  To  indicate  how  little  the 
cost  of  transportation  to  the  seaboard  affects  prices  at 
the  present  time,  I  give  the  following  quotations  of 
sales  on  May  22,  1895  : 

In  New  York,  No.  1  Wheat 85f 

In  Milwaukee,  No.  1  Wheat 82| 

It  is  a  fact  that  the  farmers  of  the  United  States  as 
a  whole  can  raise  two  bushels  of  wheat  now  with  no 
more  labor  and  at  no  greater  cost  than  was  required  to 
produce  one  bushel  prior  to  1860.  In  other  words,  when 
wheat  was  lowest  in  1893-94,  it  took  less  labor  to  pro- 
duce a  dollar's  worth  of  wheat  than  it  did  before  the 
war,  and  hence  it  is  that  a  debt  which  might  have  been 
paid  in  1860-62,  or  at  any  time  prior  to  these  years,  by 
the  proceeds  of  1,000  bushels  ol  wheat,  can  at  the  pres- 
ent time  be  paid  with  greater  ease,  even  if  the  proceeds 
of  1,500  bushels  are  required  to  pay  it.  It  is  true  that 
crops  in  every  year  are  not  alike  abundant  in  all  sec- 
tions of  the  Union;  but  what  the  farmers  of  New  Eng- 
land lack  is  not  money,  but  more  fertile  soil ;  and  what 
those  in  the  far  West  stand  in  need  of  is  not  fifty  cent 
silver  dollars,  but  a  more  abundant  rainfall,  and  an  ab- 
sence of  hot  winds  that  destroy  vegetation.  Mr.  Har- 
vey's book  would  have  been  dropped  in  the  waste 
paper  basket  unnoticed  but  for  the  fact  that  it  appeared 
during  the  business  depression  resulting  from  the  silver 
panic  of  1893.     His   statements   with   respect   to   the 


52  ANSWER  TO 

hardness  of  the  the  times  and  the  scarcity  of  money 
would  have  been  twofold  more  pertinent  and  forcible 
after  the  panics  of  1857  and  1873  than  at  this  time,  and 
yet  he  claims  that  in  1873  and  for  some  time  thereafter 
nobody  knew  silver  had  been  "  demonitized,"  and  we 
all  know  that  for  forty  years  prior  to  1873  and  for  five 
years  subsequent  to  that  year  there  was  not  a  silver  dol- 
lar in  circulation. 

I  shall  in  my  next  paper  consider  Mr.  Harvey's 
statements  with  respect  to  corn,  cotton,  wool,  cut  nails 
and  pig  iron,  and  show  what  sheer  nonsense  it  is  to 
affirm  that  gold  has  appreciated  in  value  since  1873, 
when  the  hire  of  it,  or  rent  of  it,  or  interest  of  it,  is 
now,  less  than  it  was  ever  known  to  be  before  in  the 
history  of  the  world. 


FIFTH  CHAPTER  -  Continued. 


^y^^HE  DEMAND  for  com  now,  with  nearly  double 
\J        our  population,  is  greater  than  it  was  in  1873, 

^■^  and  yet  in  1873  the  corn  crop  was  fifty- 
seven  million  bushels  greater  in  this  State  (Illinois) 
than  it  was  last  year.  The  overproduction  in  1872 
accounts  for  its  low  price  in  1873.  The  gold  standard 
accounts  for  its  low  price  now."     (P.  116.) 

The  point  Mr.  Harvey  seeks  to  establish  is  that 
overproduction  in  1872  made  the  price  of  corn  low  in 
1873,  and  that  underproduction  and  a  greater  demand 
did  not  make  the  price  of  corn  higher  in  1893  than  it 
had  been  in  1873.  But  Mr.  Harvey  has  so  framed  his 
statement  as  to  permit  his  readers  to  infer  a  falsehood. 
There  was  no  overproduction  in  1872,  and  no  underpro- 
duction in  either  1892  or  1893.  The  corn  crop  of  the 
State  of  Illinois,  to  which  he  refers,  constitutes  but  a 
small  part  of  the  corn  crop  of  the  United  States,  and 
for  the  past  ten  years  has  not  controlled  the  price  of 


"  COIN'S  FINANCIAL  SCHOOL."  53 

coru  either  in  Chicago  or  elsewhere.  A  bushel  of  shelled 
corn  weighs  but  four  pounds  less  than  a  bushel  of 
wheat,  and  hence  since  the  advent  of  competing  lines 
of  railway  and  fast  steamships,  corn  does  "  seek  distant 
markets  like  wheat "  (p.  116),  and  is  in  fact  exported, 
but  the  export  demand  for  corn  and  its  use  for  food  by 
the  people  of  the  United  States  do  not  fix  its  price. 
Pork  is  the  producfcof  corn,  and  in  this  condensed  form, 
under  present  conditions  of  railway  and  steamship  ser- 
vice, corn  will  "  always  stand  the  freight "  to  England, 
France  and  Germany. 

The  total  corn  crop  of  the  United  States  in  1872  was 
but  1,092,719,000  bushels,  while  in  1893  the  total  crop 
amounted  to  1,619,486,000  bushels,  an  increase  over 
1872  of  526,777,000  bushels.  It  was  the  total  number 
of  bushels  accessible  to  markets  however  which  controll- 
ed the  price  in  1893,  and  not  simply  the  crop  of  Illinois. 
A  portion  of  the  corn  crop  of  1872-73  never  reached 
the  market,  either  as  grain  or  pork.  It  is  not  many 
years  since  the  value  of  a  bushel  of  wheat  or  corn  would 
have  been  consumed  in  carting  it  from  Omaha  to  Chi- 
cago, and  even  as  late  as  1870-72-73  corn  was  burned 
for  fuel  in  Nebraska,  Iowa  and  other  Western  States, 
because  freight  charges  were  so  high  it  could  not  be 
shipped  at  a  profit.  Now  competing  lines  of  railway 
penetrate  every  nook  and  corner  of  the  corn  belt,  and 
freight  rates  have  been  so  reduced  that  every  bushel  of 
corn  not  used  on  the  farm  in  the  production  of  pork, 
etc.,  may  find  a  quick  market  and  ready  sale.  Mr.  Har- 
vey's attempt  to  account  for  the  low  price  of  corn  in 
1873,  therefore,  by  the  abundance  of  the  crop  in  Illi 
nois,  is  not  only  unsuccessful,  but  absurd,  and  was  evi 
dently  intended  to  deceive. 

CORN. 

As  further  evidence  that  the  prices  of  farm  products 
have  not  been  affected  by  the  alleged  appreciation  of 
gold  and  scarcity  of  money,  I  shall  call  attention  to  cer- 
tain quotations  of  corn,  swine,  and  cotton,  for  which  I 
am  indebted  to  the  New  York  /Sn/i,  of  April  J5,  1894. 


54  ANSWER  TO 

In  July,  1878,  corn  sold  in  New  York  in  terms  of 
"  gold  for  48  cents  a  bushel ;  1875,  87  cents ;  1878,  48 
cents ;  1882,  84  cents ;  1886,  46  cents ;  1888,  66  cents ; 
1889-90,  after  an  enormous  crop,  37  cents ;  April,  1890, 
37  cents;  1891,  80^  cents.  May  24,  1895,  corn  was 
quoted  in  New  York  at  from  57^  to  59  cents,  and  money 
on  call  at  1  per  cent,  per  annum,  while  prime  mercan- 
tile paper  found  ready  takers  at  3  to  4  per  cent.  The 
price  of  corn  is  low  when  the  crop  is  abundant,  and 
high  when  the  crop  is  short.  A  similar  rule  obtains 
with  respect  to  money.  When  abundant,  rates  of  in- 
terest are  low ;  when  scarce,  rates  of  interest  are  high. 
Government  bonds  bore  6  per  cent,  in  1873 ;  now  the 
government  can  borrow  money  on  sl2^  or  S  per  cent, 
basis.  Corn  is  10  cents  a  bushel  higher  to  day  than  it 
was  in  July,  1873,  and  gold  is  3  per  cent,  per  annum 
lower  to-day  than  it  was  in  1873. 

In  the  presence  of  these  facts  the  man  who  talks 
about  "  the  crime  of  1873  "  and  affirms  that  it  "  brought 
tears  to  strong  men's  eyes  and  hunger  and  pinching 
want  to  widows  and  orphans"  (p.  112)  must  be  very 
dangerously  off  his  mental  equipoise. 

SaV'INE. 

In  the  winter  of  1872-73,  just  before  the  "  crime  of 
1873  "  was  perpetrated.  Western  packers  bought  swine 
for  an  average  of  $3.40  per  100  pounds.  In  the  winter 
of  1875-76,  they  paid  an  average  of  $6.35  per  100 
pounds.  In  1878-79  the  price  averaged  $2.80.  In 
1881-82  the  average  was  $6.06.  In  "1889-90  $3.54. 
1892-93,  $6.54. 

In  view  of  the  facts  presented  what  becomes  of 
the  absurd  notion  that  farm  products  rise  and  fall 
with  the  price  of  silver?  Hogs  are  selling  to-day  for 
$1  per  100  pounds  more  than  they  sold  for  in  1873. 
The  dollar  of  1873  was  worth  86  cents;  that  of  1893 
was  worth  100  cents.  The  per  capita  of  money  in  the 
United  States  in  1873  was  $18.58;  the  per  capita  of 
money  in  1893  was  $34.75.  The  per  capita  of  money 
in  circulation  in  1873  was  $18  04;  the  per  capita  of 
money  in  circulation  in  1893  was  $23.87. 


"COIN'S  FINANCIAL  SCHOOL."  55 

COTTON. 

In  1864  cotton  sold  in  New  York  at  80  cents  per 
pound.  In  1873  it  had  fallen  to  16  cents,  a  decline  of 
6-1  cents  per  pound,  and  yet  at  the  latter  date  Mr. 
Harvey  says  nobody  knew  silver  had  been  "demonet- 
ized." "  From  1879  to  1890  the  prices  of  cotton  fluctu- 
ated between  9^  and  13  cents,  as  the  crop  happened 
to  be  full  or  short.  The  aver^Ige  of  the  twelve  years 
was  very  close  to  the  average  of  the  twelve  years  end- 
ing with  1860,  although  in  1856-57,  owing  to  the  short 
crop,  prices  rose  to  15^  cents  per  pound.  The  crops 
for  the  ten  years  ending  with  1894  averaged  twice  as 
many  bales  as  for  the  ten  years  prior  to  1860.  The 
greatest  crops  raised  were  in  1891,  8,655,518  bales,  and 
in  1892.  9,038,707  bales.  The  crop  in  1872  was  only 
one-third  in  quantity  that  of  1892,  to-wit:  2,974,315 
bales.  It  will  be  seen  from  all  this  that  the  low  prices 
of  cotton  have  resulted  from  abundant  crops  and  not 
from  scarcity  of  money  or  any  alleged  appreciation  of 
gold.  There  has  been  very  recently  an  advance  in  the 
price  of  cotton  of  over  30  per  cent. 

WOOL. 

In  1870  the  United  States  produced  162,000,000 
pounds  of  wool  and  in  1893,  303,000,000  pounds.  The 
world's  supply  of  wool  in  1870  was  1,295,000,000 
pounds ;  in  1891,  2,456,773,000  pounds.  The  world's 
clip  for  1891  was  831,000,000  pounds  greater  than  in 
1880.  With  such  rapid  increase  in  the  production  of 
wool  and  cotton  and  the  great  improvements  in  ma- 
chinery for  the  manufacture  of  these  raw  materials, 
combined  as  they  are  with  flax,  hemp,  jute,  hair  and 
shoddy  in  the  woven  fabric,  is  it  surprising  that  the 
prices  of  wool  and  cotton  are  low  and  that  clothing  is 
cheap  ?  Is  it  possible  that  lessening  prices  should  be 
regarded  as  a  curse  and  ascribed  to  an  alleged  ap- 
preciation of  gold  and  not  as  a  blessing  to  those  born 
naked  and  attributed  to  the  bountifulness  of  the  earth 
and  the  increasing  industry  and  intelligence  of  man? 
Would  you  have  clothing  dearer  than  it  is  and  more 


56  ANSWER  TO 

difficult  to  get?  Should  we  murmur  because  prices 
are  not  as  high  as  they  were  forty  years  ago  and  our 
people  not  as  poorly  clad?  But  it  is  said  these  low 
prices  indicate  that  low  wages  aie  paid  to  workingmen. 
This,  however,  is  emphatically  denied.  In  a  table 
compiled  by  Edward  Atkinson,  from  the  report  of  the 
Finance  Oommittee  of  the  United  States  Senate,  a 
comparison  is  made  of  the  wages  of  1860  with  those  of 
1890,  and  also  of  the  purchasing  power  of  a  day's  wages 
in  1860  with  that  of  a  day's  wages  in  1890.  According 
to  this  table  of  wages  and  the  purchasing  power  of 
wages  the  workingman  obtained  58  per  cent,  more 
money  for  his  day's  labor  in  1800  than  he  did  in  1860, 
and  the  purchasing  power-  of  this  day's  wages  was  72 
per  cent,  greater  in  1890  than  in  1860,  and  from  50  to 
58  per  cent,  greater  in  1890  than  in  1873.  Shall  we 
join  the  independent  free  coinage  fanatics  because 
wages  are  higher  than  they  were,  the  necessities  of 
life  cheaper  and  the  money  of  the  country  better  and 
more  abundant  ? 

NAILS. 

With  respect  to  nails  it  is  only  necessary  to  say : 

1.  That  ''from  1881  to  1881  the  nail  producing 
power  of  the  country  nearly  doubled,  while  the  con- 
suming capacity  increased  only  about  20  per  cent." 
(Wells's  Recent  Economic  Changes.) 

2.  American  inventors  have  enabled  us  to  excel 
the  world  in  the  manufacture  of  this  article  and,  as  a 
consequence,  nails  are  now  being  exported  to  all  coun- 
tries Rf^cpntl y  a  single  order  from  Birmingham,  Eng- 
land, for  20,000  kegs,  was  filled  by  an  American  nail 
mill.  Nails  are  low,  hut  this  results  from  great  com- 
petition, improved  methods  in  manufacture,  and  less- 
ened cost  of  production,  and  not  from  either  a  reduction 
in  the  wages  of  workingmen  or  an  alleged  appreciation 
in  the  value  of  gold. 

PIG   IRON. 

Mr.  Harvey  tells  us,  page  115,  that  "  the  average 
price  of  pig  iron  in  1859  was  $23.88  per  ton,  now  it  is 
about  $12."     This  fall  in  price  he,  of  course,  attributes 


"COIN'S  FINANCIAL  SCHOOL."  57 

to  an  alleged  appreciation  of  gold.  A  man  who  can 
see  no  other  cause  for  a  decline  in  the  prices  of  iron 
and  steel  since  1859,  than  the  one  assigned  by  Mr 
Harvey,  must  be  either  stone  blind  or  exceedingly 
anxious  to  deceive  his  readers.  I  have  not  the  figures 
at  hand  to  enable  me  to  compare  the  amount  of  iron 
produced  in  1859  with  the  amounts  produced  in  every 
year  since  that  time,  but  the  few  facts  I  am  prepared 
to  submit  will  be  sufficient  to  suggest  the  true  causes 
of  the  decline  in  the  prices  of  pig  iron  and  its  products. 
The  United  States  produced  in  1860  987,000  tons 
of  pig  iron ;  in  1880  the  production  had  swelled  to 
3,835,000  tons.  The  American  Iron  and  Steel  Asso- 
ciation reported  that  ''the  year  1881" — eight  years 
after  ''the  crime  of  1873'' — ''was  the  most  prosperous 
year  iron  and  steel  manufacturers  had,"  up  to  that 
date,  "  ever  known,"  and  yet  a  few  years  subsequently, 
to- wit,  "  from  1885  to  1887,  we  increased  our  produc- 
tion of  pig  iron  85  per  cent. ;  our  production  of  besse- 
mer  steel  ingots  93  per  cent.,  and  our  production  of 
open  hearth  steel  ingots  119  per  cent."  In  1859  not  a 
ton  of  pig  iron  was  produced  in  Tennessee,  Alabama, 
and  Georgia.  The  great  Mesaba  ore  beds  of  the  North- 
west, where  high  grade  ore  is  lifted  by  steam  shovels 
directly  from  the  earth  and  loaded  into  cars,  were,  in 
1859,  unknown,  and  in  1873  unworked.  The  discovery 
and  operation  of  these  beds  has  reduced  the  price  of 
iron  ore  more  than  50  per  cent.     In  1870  the  average 

Froduct  per  man  in  the  furnaces  of  Great  Britain,  and, 
think,  of  this  country  also,  was  estimated  at  173  tons  ; 
but  in  1884  the  product  per  man  had  increased  to  261 
tons.  By  the  Gilchrist-Thomas  process  four  men  can 
make  as  much  steel,  with  less  cost  of  material,  as  it 
took  ten  men  ten  years  ago  to  accomplish  (D.  A. 
Wells).  A  ton  of  steel  rails  can  now  be  made  with 
one-half  less  coal  than  was  required  in  1868.  The 
steam  engines  of  the  world  supplv  power  equiva- 
lent to  that  of  200,000,000  horses.  Fonr-lifths  of  these 
engines  have  been  constructed  since  1805.  The  appli- 
cation and  use  of  steam  has  more  than  trebled  man's 
working  ]xnver  ( D.  A.  Wells). 


^  ANSWER  TO 

But  in  talking  of  prices  Mr.  Harvey  ignores  the  in- 
ventive genius  of  the  age,  and  will  not  take  into  ac- 
count the  reapers,  mowers,  binders,  and  threshers  ;  the 
machine  that  makes  a  shoe  or  fashions  a  hat,  or  sews  a 
garment,  or  knits  a  stocking ;  these  are  all  thrust  aside. 
Steam  and  electricity,  which  a  child  may  direct  in  the 
performance  of  the  most  intricate  of  tasks,  are  counted 
of  no  importance.  He  speaks  of  a  few  articles  which, 
on  account  of  great  abundance,  have  been  low  in  price, 
but  is  discreetly  silent  with  respect  to  pork,  beef,  hay, 
rye,  barley,  oats,  potatoes,  fruit,  poultry,  butter,  lard 
and  cheese,  and  does  not  allude  to  the  fact  that  the 
people  of  this  country  obtain  more  money  annually  for 
eggs  than  for  the  product  of  our  silver  mines,  and  that 
eggs  were  never  so  high  as  they  have  been  since  1873. 

The  fact  is,  Mr.  Harvey  writes  like  one  who  had 
been  an  unsuccessful  speculator  in  silver  mining  stock, 
and  who  now  seeks  to  attribute  his  losses  to  something 
besides  his  own  defective  judgment.  But  whether  he 
has  or  has  not  been  defrauded  of  good  money  by  de- 
signing rascals,  who  in  the  mining  regions  are  always 
on  watch  for  the  tenderfoot,  it  is  nevertheless  evident 
from  his  reckless  statements,  incorrect  conclusions,  and 
illogical  chatter  about  money  that  he  should  be  con- 
demned as  "  a  bad  egg,"  and  cast  aside. 


FIFTH  CHAPTER  — Concluded. 


s  DEBTS    OF  THE    UNITED   STATES. 

CHOSE  who  look  upon  the  author  of  "  Coin's  Finan- 
cial School"  as  a  heaven-born  financier,  and  hence 
regard  his  statements  as  accurate  and  his  conclu- 
sions infallible,  have  indeed  good  reason  to  tremble  with 
anxiety  and  alarm.  If  Mr.  Harvey  is  correct  in  his  esti- 
mate of  the  resources  and  liabilities  of  the  United 
States  it  is  evident  that  the  country,  if  sold  out  by  the 
sheriflf,  would  not  pay  60  per  cent,  of  its  indebtedness, 


"  COIN'S  FINANCIAL  SCHOOL."  59 

and  if  by  any  possibility  it  should  make  an  assignment, 
the  probabilities  are  that  the  assignee  and  his  lawyer 
would  gobble  all  the  property  and  not  leave  a  farthing 
for  distribution  among  importunate  creditors.  Here  are 
the  words  and  figures  which  tell  the  humiliating  story 
of  the  great  republic's  insolvency : 

"  The  total  debts  of  the  United  States,  national,  mu- 
nicipal, state,  county,  corporate  and  private,  is  now  es- 
timated at  $40,000,000,000"  (p.  119).  By  turning  to 
the  appendix  of  Mr.  Harvey's  book,  on  what  should  be 
page  157,  we  find  that  "  the  assessed  valuation  of  all 
property  in  the  United  States  is  $24,651,585,465." 
Now,  if  the  value  of  all  the  property  of  the  United 
States  as  given  by  Mr.  Harvey  in  the  appendix  referred 
to  were  deducted  from  the  total  debts  of  the  United 
States  as  estimated  by  Mr.  Harvey  on  page  119,  an  un- 
paid balance  of  indebtedness  would  remain  amounting 
to  fifteen  billion  three  hundred  and  forty-eight  million 
four  hundred  and  twenty-four  thousand  five  hundred 
and  thirty-five  dollars  ($15,348,424,535).  The  financial 
outlook,  therefore,  is  exceedingly  disheartening  to  the 
people  of  the  United  States,  and  yet  there  is  one  broad 
streak  of  silver  lining  the  sombre  cloud  which  hangs 
over  us,  to-wit :  the  fact  that  our  creditors  will  lose  at 
least  40  per  cent,  of  the  money  we  owe  them,  and  if  by 
chance  the  countr}^  should  conclude  to  make  an  assign- 
ment, the  condemned  rascals  will  not  get  anything  at 
all  out  of  the  hands  of  the  assignee  and  his  attorney. 
This  last  reflection  is  very  comforting. 

Before  I  proceed  to  a  consideration  of  the  subject 
of  debts,  permit  me  to  ask  and  answer  a  query  of  my 
own.  Who  are  the  creditors — the  extortioners  who 
seize  guileless  people  by  the  throat  and  compel  them 
to  borrow  money  ?  Mr.  Harvey  tells  us  "  everybody, 
except  the  money  lender,  is  in  debt"  (p.  119),  Who 
then  are  the  money  lenders?  In  answer  to  this  it  may 
be  said  that  the  banks  are  money  lenders,  but  this 
would  suggest  but  half  the  truth.  Banks  borrow  and 
lend,  and  between  the  rate  of  interest  they  give  and  the 
rate  they  get,  manage  to  make  salaries  for  employes 
and  dividends  for  those  who  assume  the  risks  of  busi- 


60  ANSWER  TO 

mess.  The  fact  is,  banks  are  among  the  greatest  bor- 
rowers in  the  world.  The  3,650  national  banks  in  the 
United  States  owe  1,929,340  people  the  sum  of  $1,647,- 
017,129.  This  amount  is  not  loaned  to  the  banks  by 
rich  men,  but  in  the  main  by  merchants,  shopkeepers, 
contractors,  manufacturers,  mechanics,  laborers — men 
engaged  in  the  active  and  necessary  concerns  of  life, 
whose  average  deposit  is  but  $853.67.  Savings  banks 
without  capital  stock  do  business  wholly  on  borrowed 
money,  or,  in  other  words,  they  belong  exclusively  to 
those  who  deposit  in  them,  and  the  depositors  receive 
in  the  way  of  interest  all  the  net  profits  of  the  business. 
They  are  emphatically  poor  men's  banks.  The  sav- 
ings banks  of  the  United  States  owe  4,739,194  depos- 
itors $  1,739,006,705.  The  life  insurance  companies  of 
the  United  States  will  owe  their  policy  holders,  at 
death,  $12,486,803,990;  in  this  vast  sum  provision  is 
made  for  widows  and  orphans.  How  much  the  private 
banks  of  the  country  are  indebted  to  the  people  I.  do 
not  know,  but  the  sum  total  must  be  very  large.  The 
truth  is  the  money  of  the  country  belongs,  in  the  main, 
to  the  poor  men  oi"  the  country.  Some  of  these  men 
loan  it  directly  to  their  neighbors ;  some  put  it  in 
building  and  loan  associations;  some  use  it  with  life 
insurance  companies  to  make  provision  for  wives  and 
children;  some  lodge  it  in  savings  banks,  and  still 
others  deposit  it  in  national,  state  or  private  banks. 
Now  let  us  make  aii  estimate  of  the  number  of  money 
lenders  in  the  United  States  : 

Those  wlio  lend  to  national  banks 1,929,340 

Those  who  lend  to  savings  banks         ..  4,739,194 

Those  who  lend  to  life  insurance  companies 10.983,91/ 

Those  who  lend  to  building  and  loan  associations. .  .  1,745,725 
Those  who  lend  to  State   and   nrivate  banks,  estim- 
ated            ' 1,000,000 

ThoKf  nho  lend  directly  to  neig^hbors,  estimated. .  1,000,000 


Total 21,398,176 

These,  then,  are  the  money  lenders  of  the  United 
States  "  who  are  going  to  eat  the  propertv  owner  up." 
(P.  119.) 


"COIN'S  FINANCIAL  SCHOOL."  61 

"  Everybody  except  the  money  lender  is  in  debt." 
(P.  119).  Very  well ;  in  excepting  the  moneylender 
and  his  or  her  family  fully  two-thirds  of  our  popula- 
tion is  excepted.  Where  does  the  money  come  from 
with  which  mortgage  loans  are  made?  From  life 
insurance  and  trust  companies,  savings  banks  and 
building  and  loan  associations.  Seventeen  million 
people  own  them ! 

Where  does  the  money  come  from  to  make  loans  to 
men  in  active  business?  From  national,  state  and 
private  banks,  and  in  these  banks  three  million  of 
business  men  are  interested  either  as  stockholders  or 
depositors,  and  the  larger  interest  is  that  of  the  de- 
positors. Mr.  Harvey  evidently  thinks  that  if  his 
scheme  of  independent  free  coinage  were  adopted  the 
banks  would  be  compelled  to  accept  50  cent  silver 
dollars  in  payment  of  their  loans,  and  so  they  might 
be  if  they  had  any  loans  outstanding  at  the  time.  But 
boys  who  go  hunting  for  weasels  rarely  find  the  beasts 
asleep,  and  the  graduates  from  Mr.  Harvey's  tinancial 
school,  in  their  hunt  for  money  lenders,  would  find 
they  were  a  year  or  two  too  late  to  bag  the  game.  The 
more  direct,  and  probably  more  successful  way  for  Mr. 
Harvey  and  his  friends  to  reach  the  end  proposed, 
would  be  to  equip  themselves  with  the  tools  and  appli- 
ances of  the  professional  burglar,  and  begin  work  be- 
fore the  banks  had  knowledge  of  their  approach. 

In  what  relation  do  the  creditor  and  the  debtor 
stand  with  respect  to  each  other  ?  Simply  this :  The 
one  owns  what  the  other  uses.  The  thing  owned  by 
the  one  and  used  by  the  other  may  be  money,  farm, 
house,  cart  or  horse.  The  contract  signed  by  the 
debtor  to  return  the  property  to  the  creditor  at  the 
expiration  of  a  certain  time  does  not  diminish  the  prop- 
erty of  a  country  nor  does  its  strict  fulfillment  leave 
the  debtor  in  any  worse  condition  than  he  was  when 
the  agreement  was  entered  into.  Assume,  for  the  sake 
of  argument,  that  the  money,  land,  house,  cart  or 
horse  has,  by  reason  of  increased  demand  and  lessened 
supply,  appreciated  in  value  while  in  the  custody  of 
the  debtor.     This  fact  could  not  change  his  right  to  use 


62  ANSWER  TO 

for  a  definite  time  and  then  return,  into  a  right  to  hold 
forever  any  part  of  what  never  belonj^jed  to  him.  But 
it  may  be  said  the  debtor  has  lost  money  by  the  trans 
action,  and  so  it  may  be  said  the  creditor  has  lost 
money  by  the  transaction.  If  this  were  true,  however, 
in  either  the  one  case  or  the  other,  the  loss  resulted 
from  defective  judgment  in  the  bargaining,  and  to  pro- 
vide against  this  by  law,  would  be  a  denial  to  freemen 
of  tLe  right  to  make  their  own  contracts  and  an  ob- 
struction to  the  rapid  flow  of  business.  Public  policy 
demands,  therefore,  that  men  competent  to  exercise 
the  right  to  make  contracts,  should  assume  whatever 
risk  of  loss  there  may  be  in  their  fulfillment.  To 
establish  any  other  rule  would  leave  every  transaction 
unsettled,  and  result  in  a  total  paralysis  of  business. 
But  Mr.  Harvey  may  say  that  when  the  debt  for  money 
was  incurred  the  debtor  had  reason  to  expect  he  would 
be  permitted  to  make  payment  in  silver.  In  reply  to 
this  it  is  only  necessary  to  suggest  that  there  are 
500,000,000  of  legal  tender  silver  dollars  in  the  coun- 
try with  which  payment  can  now  be  made,  and  that 
there  never  was  a  time  in  the  history  of  the  world 
wlien  silver  dollars  were  either  more  abundant  or  more 
easily  obtained  than  at  the  present  moment. 

If  by  a  provision  of  law  men  were  denied  the  right 
to  lend,  or  borrow,  or  to  buy,  or  sell  on  credit,  the  busi- 
ness of  the  country  w^ould  be  brought  suddenly  to  a 
standstill  and  millions  of  men  would  be  unable  to  find 
employment.  The  credit  system,  when  wisely  used, 
is  the  business  man's  best  friend.  It  places  within  his 
reacli  not  only  the  commodities  he  needs  and  can  not 
himself  produce,  but  the  accumulated  capital  of  cen- 
turies. It  enables  him  to  do  in  a  day,  week,  or  year 
what  in  its  absence  would  require  a  lifetime  to  accom- 
plish. It  has  built  over  176,000  miles  of  railway  iu 
this  country,  and  without  these  great  artei'ies  of  inland 
commerce  the  products  of  the  farm  would  have  scanty 
market;  farms  in  certain  sections  would  be  compara- 
tively worthless,  and  great  cities  impossible.  The 
debts  of  the  United  States  may  seem  large,  but  they 
indicate  neither  lack  of  products  nor  diminished  pros- 


"  COIN'S  FINANCIAL  SCHOOL."  63 

perity.  Every  debt  wisely  incnrrecl  is  offset  by  a  credit 
or  by  property  abundantly  sufficient  to  cancel  it;  and 
debts  are  never  larger  than  when  business  is  most 
active  and  remunerative.  During  panics  and  the  years 
immediately  succeeding  panics,  when  confidence  has 
been  stricken  down  and  distrust  and  fear  are  over- 
whelming, indebtedness  is  rapidly  reduced,  business 
stagnant,  times  hard,  workingmen  unemployed  and  in 
distress  for  the  necessities  of  life.  The  moment  con- 
fidence is  restored  and  credits  freely  given,  private  and 
corporate  debts  increase  and  multiply,  and  then  it  is 
that  commerce,  agriculture  and  manufactures  get  on 
their  legs  again,  and  with  new  vigor  bound  like  an 
antelope  on  another  round  of  prosperity.  The  man 
who  looks  simply  at  the  public  or  private  indebtedness 
of  a  country  and  never  at  the  things  upon  which  it  is 
based,  is  like  one  who  turns  his  back  upon  a  store 
house  filled  with  riches  and  persists  in  looking  at  its 
shadow. 

"*  But  this  ball  that  represents  debts  will  not  de- 
crease any."  (P.  118).  The  contents  of  the  bail  are 
constantly  changing,  and  are  never  for  two  full  days 
the  same.  The  ball  is  like  an  elevator  in  which  grain 
is  received  on  storage.  In  times  of  prosperity  and 
generous  harvests,  it  is  full  to  overflowing  in  years  of 
adversity  and  scanty  crops,  :t  is  but  partly  filled,  and 
then  only  with  the  poorest  grain.  When  there  is  a 
large  cotton,  wheat  or  corn  crop  to  be  gathered  in  and 
marketed,  the  volume  of  indebtedness  is  increased. 
On  the  oJher  hand,  when  the  seasons  are  unpropitious 
and  fields  unproductive,  the  volume  of  indebtedness 
is  diminished. 

Let  us  see  how  debts  are  created  and  how  they  are 
rnncelled.  The  workingmen  of  the  country  have,  in 
round  figures,  loaned  $2,000,000,000  to  the  savings 
banks,  and  by  doing  so  a  debt  of  $2,000,000,000  has 
been  created.  Now  the  savings  banks  reloan  this 
money,  or  these  credits,  to  state,  countv,  city  or  to 
individuals,  and  another  debt  of  $2,000,000,000  is 
c-reated.  making  a  total  indebtedness  of  $4,000,000,000. 
In  time  the  bonds  or  notes  which  the  banks  hold  are 


64  ANSWER  TO 

paid  off  and  the  indebtedness  reduced  $2,000,000,000. 
With  the  money  or  credits  so  obtained  the  banks  now 
pay  their  depositors  and  all  the  indebtedness  is  can- 
celled. Nobody  has  been  harmed  by  these  transac- 
tions ;  on  the  contrary,  we  have  good  reason  to  believe 
that  all  the  parties  to  them  have  been  benefited. 

B  buys  a  (arm  of  A  for  $  15,000  on  the  usual  terms 
of  payment,  to-wit :  One-third  down,  one-third  in  one 
year,  and  one-third  in  two  years,  deferred  payments 
secured  by  mortgage.  Here  an  indebtedness  of  $10,000 
is  created.  Now  A  finds  a  farm  in  some  other  neigh- 
borhood, county  or  state,  which  suits  him  better  than 
the  one  he  sold,  and  so  he  buys  a  farm  of  C  for  the 
same  money  and  on  the  same  terms  of  payment  and 
the  indebtedness  is  increased  to  $20,000.  C  repeats 
the  operation  and  so  farms  change  hands  and  debts 
increase  through  all  the  letters  of  the  alphabet,  until 
finally  a  million  dollars  of  indebtedness  may  have  be- 
come a  matter  of  official  record.  Mr.  Harvey  looks 
upon  this  aggregate  of  mortgage  debts  and  pretends 
to  see  in  it  evidences  of  approaching  bankruptcy  and 
ruin;  but  the  parties  most  interested  are  no  whit 
alarmed;  they  are  men  of  common  sense  and  know 
what  they  have  been  doing.  B  finally  pays  his  debt 
of  $  10,000  to  A,  and  A,  with  the  money  received  from 
B,  pays  his  debt  to  C,  and  C  cancels  his  indebtedness 
to  D,  and  so  this  $10,000  runs  through  the  whole 
alphabet  of  buyers  and  sellers  until  it  cancels  a  million 
dollars  of  indebtedness ;  leaves  every  man  who  bought 
and  sold  the  owner  of  an  unincumbered  farm,  and 
somebody  at  the  end  in  possession  of  $10,000  which 
he  is  exceedingly  anxious  to  invest. 

Again  the  national.  State,  and  private  banks  owe 
their  depositors  say  $3,000,000,000.  This  money  or 
these  credits  are  in  part  loaiied  by  the  banks  to  traders 
and  manufacturers,  and  thus  $5,000,000,000  of  indebt- 
edness is  created  —  $  3,000,000,000  representing  the 
debts  of  the  banks  to  depositors,  and  $2,000,000,000 
being  the  debts  of  traders  and  manufacturers  to  banks ; 
but  the  chain  of  indebtedness  does  not  end  here. 
The  manufacturer  to  whom  a  part  of  the  sum  has  been 


"^O-NS   x'i:NAxNv:iAL   SCHOOL."  65- 

loaned  invests  in  raw  material  and  then  sells  the 
iinislied  product  on  time  to  the  wholesaler.  The  latter 
sells  on  the  usual  terms  ol*  credit  to  the  retailer,  and 
he  on  the  usual  terras  to  the  planter,  stockman,  farmer, 
contractor,  etc.,  and  thus  the  amount  of  indebtedness 
based  on  original  loans  aggregating  $3,000,000,000 
may  swell  to  six  or  eight  billions.  But  see  how  easily 
this  vast  sum  is  cancelled.  The  planter,  stockman, 
farmer,  etc.,  pays  the  retailer;  the  retailer  pays  the 
wholesaler;  the  wholesaler  pays  the  manufacturer; 
the  manufacturer  pays  the  bank  and  the  bank  pays 
off  its  depositors  and  so  the  ball  of  debt,  which  was 
wound  up  to  6  or  8  billions  with  profit  to  everybody, 
is  unwound  without  injury  to  anybody,  and  the  orig- 
inal three  billions  of  money,  credits,  or  property  is 
once  more  in  the  hands  of  those  who  own  it,  ready  to 
go  forth  again  upon  a  journey  similar  to  that  from 
which  it  has  just  returned.  It  is  true  that  men  who 
borrow  money  to  buy  lottery  tickets,  or  bogus  gold 
bricks,  or  watered  stocks,  or  salted  mines,  may  never 
pay  their  debts,  and  hence  inflict  a  loss  upon  their 
creditors.  Still  by  these  unwise  investments  nothing 
is  lost  to  the  country.  The  money  or  property  in  such 
cases  simply  passes  from  the  hands  of  honest  men 
through  the  hands  of  a  fool  into  the  hands  of  a  rogue. 
It  is  also  true  that  honest  men  often  make  injudicious 
investments,  or  engage  in  pursuits  for  which  they  have 
no  skill,  or  confide  in  people  who  betray  and  despoil 
them,  or  are  stricken  down  by  sickness,  or  over- 
whelmed by  some  unexpected  calamity,  and  hence  are 
unable  to  pay  their  debts.  But  none  of  these  causes 
of  failure  are  properly  chargeable  to  either  the  credit 
system  or  to  the  circulating  medium  of  the  country. 

Mortgage  indebtedness  always  appears  to  be  much 
greater  on  official  records  and  in  tables  of  statistics 
than  it  is  in  fact.  Mortgages  are  never  cancelled  by 
the  mortgagee  until  the  last  dollar  they  wero  i!;iven  to 
secure  has  been  fully  paid.  In  thousands  of  instances 
it  will  be  found  that  three-fourths  of  rtn  incumbrance 
on  farm  or  city  property  has  been  removed,  while  the 
mortgage  still  remains  on  record  for  tho  full  amount 


QQ  ANSWER   TO 

of  the  original  debt.  In  other  instances  the  whole 
sum  has  been  paid  and  by  neglect  or  design  on  the 
part  of  the  mortgagor,  public  record  of  the  fact  has  not 
been  made.  In  still  other  instances  one  mortgage  is 
simply  a  link  in  a  long  chain  of  mortgage  debts.,  and 
when  it  is  paid  the  money  runs  down  the  line  and 
pays  the  whole.  Building  and  loan  associations  have 
thousands  of  mortgages  on  record  for  the  full  amounts 
of  the  original  loans,  and  yet  they  have  for  years  been 
receiving  fortnightly  or  monthly  payments  on  the  notes 
the  mortgagee  were  given  to  secure.  The  same  is  true 
of  mortgages  held  by  sellers  of  city  and  suburban  lots. 
The  bonds  of  a  railroad  or  of  a  manufacturing  enter- 
prise, or  of  some  wildcat  mining  company,  or  of  some 
boom  town  venture  may  be  on  record  at  their  face 
value,  and  not  be  worth  in  the  market  five  cents  on 
the  dollar.  Speculators  often  build  railroads  and  open 
coal,  iron  or  silver  mines,  not  with  a  view  to  operating 
them,  but  for  the  purpose  of  issuing  stocks  and  bonds 
to  palm  off  on  to  unsuspecting  people. 

Our  courts  have  recently  been  struggling  with  a 
case  involving  $8,000,000  of  railroad  bonds,  which,  it 
is  alleged,  were  not  issued  for  the  betterment  of  the 
road,  but  for  the  enrichment  of  those  who  temporarily 
controlled  it.  The  country  is  well  supplied  with  mort- 
gage bonds  on  coal  lands  at  fictitious  values,  on  silver 
mining  property,  on  oil  lands,  on  iron  furnaces  and 
iron  mines,  on  boom  town  manufacturing  plants,  on 
railroads  unable  to  pay  operating  expenses,  on  those 
in  process  of  construction,  and  on  proposed  roads  that 
never  will  be  built.  It  does  not  cost  much  to  record  a 
mortgage  for  a  million  or  more  on  a  hill  supposed  to 
contain  iron,  on  a  ridge  supposed  to  contain  coal,  on  a 
hole  supposed  to  have  silver  at  the  bottom  of  it,  or  on 
a  field  which  taints  the  air  with  the  smell  of  gas  or  oil. 
For  the  payment  of  such  sham  indebtedness,  however, 
no  demand  will  ever  be  made  on  either  the  money  or 
the  products  of  the  country.  Mr.  Harvey's  item  of 
railroad  indebtedness  should  be  cut  down  one-half. 
His  item  of  mortgage  indebtedness  of  business  realty, 
street  railways,  manufactures,  and  business  enterprises 


"COIN'S  FINANCIAL  SCHOOL."  (Jf 

in  several  billions  too  high.  His  estimate  of  the  mort- 
gages on  farms  and  homes  should  suffer  a  reduction  of 
two-thirds.  The  money  loaned  by  the  banks  to  the 
people  represents  the  money  borrowed  by  the  banks 
from  the  people,  and  the  one  indebtedness  will,  in 
time,  offset  the  other.  The  estimate  he  gives  of  the 
value  of  all  property  of  the  United  States  is  at  least 
35  billions  less  than  it  should  be.  It  may  have  been 
taken  from  official  reports,  but  personal  property  of 
both  town  and  country,  and  farms,  lots,  and  houses 
are  assessed  for  taxation  at  less  than  fifty  per  cent,  of 
their  true  value  in  money. 


REVIEW  OF  SIXTH  CHAPTER— In  Part, 


^'V^R.  Harvey  begins  an  alleged  speech  on  page  130, 
^11  and  in  its  delivery  never  fails  to  applaud  himself 
when  he  gives  utterance  to  a  sentence  or  a  sen- 
timent intensely  silly  or  wholly  false.  "  In  the  midst  of 
plenty  we  are  in  want."  In  want  of  what?  "  Helpless 
children  and  the  best  womanhood  and  manhood  in 
America  appeal  to  us  for  release  from  a  bondage  that  is 
destructive  of  life  and  liberty."  What  bondage  ?  "  The 
Orient,  with  its  teeming  millions,  and  France,  the  cradle 
of  science  and  liberty  in  Europe,  look  to  the  United  States 
to  roll  back  the  accumulated  disasters  of  the  last  twenty- 
one  years.  [Applause]  "  (p.  131),  What  disasters  ?  Not 
those  resulting  from  lack  of  money,  for  in  this  country 
we  have  one  thousand  millions  more  money  than  we 
had  in  1873;  better  money  and  a  larger  amount  per 
capita.  Not  disasters  resulting  from  diminished  crops 
or  scarcity  of  products  of  any  kind,  for  the  fields  have 
yielded  plentiful  harvests;  the  output  of  our  manufac- 
tories has  been  abundant ;  the  commerce  of  the  countrj'' 
increasing,  and  the  workingman  better  paid  than  he 
ever  was  before.    Not  disasters  resulting  from  either 


68  ANSWER   TO 

domestic  or  foreign  wars,  for  we  have  been  at  peace 
among  ourselves  and  on  friendly  relations  with  all  the 
nations  of  the  world.  During  the  twenty-one  years  re- 
ferred to,  our  sales  of  products  to  other  countries  ex- 
ceeded our  purchases  from  them  by  about  2,000  million 
dollars,  and  in  1894  our  exports  were  over  $200,000,000 
in  excess  of  imports,  whereas  in  1873  our  imports  ex- 
ceeded exports  by  more  than  $1]  9,000,000. 

— "  If  it  is  claimed  we  must  adopt  for  money  the 
meta!  England  selects"  (p.  131 ).  Nobody  ever  made 
such  a  claim  or  ever  thought  of  making  it.  England 
does  not  care  whether  our  money  is  gold,  silver,  brass, 
copper  or  irredeemable  paper.  Mexico's  silver  dollars 
are  worth  but  fifty  cents,  but  the  circulating  medium  of 
Mexico  affects  neither  our  business  nor  that  ol"  England. 
It  is  a  burden  which  the  people  of  Mexico  must  bear 
alone.  — "A  war  with  England  would  be  the  most 
popular  ever  waged  on  the  face  oi'  the  earth  "  (  p  132  ). 
Why  should  a  war  with  England  be  popular?  Her 
people  are  not  only  our  kindred,  but  they  are  our  best 
customers  in  the  purchase  of  food  stuffs  and  cotton. 
War  means  the  expenditure  of  money,  the  waste  of 
property,  the  sacrifice  ol  life,  the  grief  of  parents,  the 
breaking  hearts  of  wives,  and  the  homelessness  of 
children.  The  people  of  the  United  States  will  never 
go  to  war  with  '"  repudiation  "  and  •'  fifty-cent  dollar" 
inscribed  upon  their  battle  flags. 

— "  England  is  the  creditor  nation  of  the  globe,  and 
collects  hundreds  of  millions  of  dollars  in  interest  an- 
nually." Did  England  ever  compel  anybody  to  borrow 
monev  of  her?  Does  she  drag  Americans  across  the 
sea  and  force  them  to  take  gold  ?  Nonsense !  Eng- 
land has  held  to  the  gold  standard  for  eighty  years,  and 
has  prospered ;  in  the  meantime  her  rivals  have  been 
alternating  from  silver  to  gold,  and  from  gold  to  silver, 
and  have  suffered  losses  and  been  subjected  to  embar- 
rassments at  every  change. 

—  •'  The  money  lenders  of  the  United  States,  who 
own  substantially  all  our  money,  have  a  selfish  interest 
in  maintaining  the  gold  standard"  (p.  133).  The 
money  lenders  of  this  country,  numbering  as  they  do 


'   COIN'S   FINANCIAL  SCHOOL."  69 

over  20,000,000,  with  families  dependent  on  them, 
numbering  40,000,000  more,  are  interested  in  maintain- 
ing an  honest  standard — a  standard  that  will  not  shrink 
and  swell  in  response  to  the  wishes  of  those  who  seek 
to  borrow  as  much  as  possible  and  pay  back  as  little  as 
they  can. 

— ''  With  silver  remonetized  and  gold  at  a  premium, 
not  one-tenth  of  the  hardships  would  result  that  now 
afflict  us.  First  it  would  double  the  value  of  all  prop- 
erty" (p.  133).  How?  Would  one  bushel  of  wheat 
become  two  bushels ;  one  yard  of  cloth  two  yards  :  one 
acre  of  land  two  acres  ;  one  horse  two  horses  ?  No. 
The  only  value  affected  would  be  the  value  of  the  dol- 
lar.    This  would  be  cut  in  twain. 

— "  Second,  only  -i  per  cent,  of  the  business  of  the 
people  of  this  nation  is  carried  on  with  foreign 
countries " ;  a  solid  reason  for  keeping  3ur  money 
good.  Shall  we  reduce  the  value  of  our  money  in 
order  to  inflict  a  loss  upon  those  with  whom  we  trans- 
act but  4  per  cent,  of  business,  when  by  so  doing  we 
should  inflict  a  loss  twenty-four  times  greater  upon  our 
own  people  ? 

— "  Is  it  not  better  to  legislate  in  the  interest  of  96 
per  cent,  of  our  business  than  tbe  remaining  4  per 
cent?"  Certainly,  and  this  is  just  what  the  United 
States  has  been  doing.  An  inferior  currency  would  un- 
settle values,  embarrass  trade,  diminish  the  purchasing 
power  of  wages,  rob  the  savings  bank  depositor,  reduce 
the  soldier's  pension,  banish  gold,  give  us  silver  mono- 
metallism and  a  fifty-cent  dollar.  Such  money  would 
do  injury  to  us,  but  harm  to  no  one  else,  for  other  na- 
tions could  not  be  compelled  to  use  it. 

— ''  In  the  impending  struggle  for  the  mastery  of  the 
commerce  of  the  world  the  financial  combat  between 
England  and  the  United  can  not  be  avoided  "  (p.  135). 
What  indications  are  there  of  a  prospective  struggle  ? 
None.  England  and  the  United  States  are  on  friendly 
terms.  The  seas  are  open  to  our  merchant  ships  as  well 
as  to  hers.  The  annual  balances  of  trade  are  largely  in 
our  favor.  The  per  capita  of  our  national  debt  is  $73.16 
less  than  that  of  Great  Britain,  and  $101.72  less  than 


7«  AKWWBR  TO 

that  of  France.     Why.  therefor©,  should  our  souls  W 
disquieted  within  xis  ? 

— ''  The  gold  standard  will  give  England  the  com- 
•merce  and  wealth  of  the  world  "  (p.  135).  Why  should 
not  this  standard  be  erery  whit  as  good  for  the  United 
States  as  for  England  ?  Americans  and  the  people  of 
the  British  islands  are  very  much  alike.  They  speak 
the  same  language,  and  are  of  the  same  blood.  If  an 
experience  of  eighty  years  has  shown  that  the  gold 
standard  is  a  good  thing  for  them,  may  we  not  reason- 
ably conclude  it  would  be  a  good  thing  for  us  ? 

—  **The  bimetallic  standard  (obtained  through  the 
unlimited  coinage  of  silrer)  will  make  the  United  States 
the  most  prosperous  nation  on  the  globe "  (p.  135). 
The  restricted  coinage  of  silver,  Mr.  Harvey  tells  us, 
"  will  give  England  the  commerce  and  wealth  of  the 
world,"  and  the  free  coinage  of  silver  "  will  make  the 
United  States  the  most  prosperous  nation  on  the  globe." 
What  does  he  mean  ?  If  wealth  is  not  prosperity,  what 
is  ?  And,  if  prosperity  is  not  wealth,  what  is  it  ?  Why 
should  the  United  States  prosper  under  free  coinage, 
and  England  grow  rich  under  restricted  coinage  ?  Men 
are  men,  commerce  is  commerce,  and  money  is  money 
the  world  over.  What  is  good  for  one  should  be  equally 
good  for  another.  We  know  the  gold  standard  has 
helped  England.  We  do  not  know,  and  have  no  reason 
to  suppose  the  independent  free  coinage  of  silver  would 
benefit  us. 

—  "Free  coinage  in  the  United  States  will  at  once 
establish  a  parity  between  the  two  metals"  (p.  135). 
That  parity  is  now  established  by  restricted  coinage, 
and  Mr.  Harvey's  statements  and  tables  of  statistics 
prove  that  it  never  was  established  by  independent 
free  coinage,  either  here  or  elsewhere. 

— "Any  nation  that  is  big  enough  to  take  all  the 
■ilver  in  the  world  and  give  back  merchandise  and  pro- 
ducts in  payment  for  it,  will  at  once  establish  a  parity 
between  it  and  gold"  (p.  135).  No  nation  has  ever 
yet  been  big  enough  to  do  this.  England  was  not  big 
enough,  and  so  she  restricted  the  coihage  of  silver  in 
1816.     Germany  was   not  big  enough,   and  she  made 


"  COIN'S  FINANCIAL  SCHOOL."  71 

the  preliminary  arrangements  to  restrict  coinage  in 
1871.  Tiie  United  States  restricted  the  coinage  of 
silver  in  1853,  and  again  in  1873;  France  and  the 
Latin  Union  were  not  "■  big  enough  to  take  all  the  silver 
in  the  world  and  give  back  merchandise  and  products 
in  payment  for  it,"  and  hence  they  restricted  the  coin- 
age of  silver  in  1875,  Spain  and  Belgium  in  1876,  Aus- 
tria-Hungary in  1891,  and  India  in  1893.  In  brief,  no 
single  nation  is  big  enough  to  do  successfully  what  Mr. 
Harvey  desires  to  have  done.  Independent  free  coin- 
age means  more  silver  and  less  gold,  more  work  and 
less  wages,  more  metal  and  less  money.  Mexico  is  now 
in  the  act  of  trying  Mr.  Harvey's  experiment,  and  by 
his  own  confession  she  is  going  on  the  double-quick  to 
bankruptcy. 

— "  France  and  the  Latin  Union  .  .  .  maintained 
a  premium  on  silver  for  forty  years"  (p.  135).  Why 
did  they  not  continue  to  maintain  a  premium  on  silver? 
Why  abandon  the  struggle  in  1875?  Because  they 
found  they  were  becoming  the  dumping  ground  for  all 
the  surplus  silver  of  the  world ;  that  gold  was  going  to 
other  countries  and  that  silver  was  no  longer  the  favor- 
ite money  metal  of  commerce  and  of  mankind. 

— "The  bankers  of  the  great  money  centers  must  be 
given  to  understand  that  they  must  take  their  hands 
from  the  throat  of  the  government*'  (p  !36).  When 
did  they  ever  have  their  hands  on  the  throat  of  the 
government?  Time  and  again  in  periods  of  distress 
and  peril  the  bankers  of  the  United  States  have  rallied 
to  the  assistance  of  the  government.  The  20,000.000 
people  directly  interested  in  the  moneyed  institutions 
of  the  country,  and  the  40,000,000  dependent  upon 
them  for  support,  constitute  a  large  part  of  the  gov- 
erned, and  each  one  of  these  60,000.000  of  people  has 
just  as  much  right  to  say  what  the  money  of  the 
country  shall  be  as  Mr.  Harvey. 

— "The  unlimited  demand  for  silver  and  its  free  use 
by   the   government  will   appreciate   its   value,  etc. " 
(p.  137).    There  can  be  no  unlimited  demand  for  either 
silver  or  gold  to  measure  the  value  or  facilitate  the  ex 
change  of  a  limited  supply  of  products.    Sixty  million  sil 


72  ANSWER  TO 

ver  dollars  are  now  in  circulation,  and  probably  $400,- 
000,000  are  stored  asvay  in  the  vaults  of  the  treasury.  If 
the  demand,  were  unlimited  there  would  be  no  idle  dol- 
lars. Silver  is  received  for  customs  dues,  for  internal  rev- 
enue taxes,  for  every  debt  due  the  government.  What 
freer  use  could  it  make  of  silver  and  mamtain  it  on  a  par- 
ity with  gold  ?  An  effort  to  force  silver  on  the  people,  or 
the  coinage  of  an  additional  500,000,000  of  silver  dol- 
lars, would  not  depreciate  gpld.  It  would  banish  it  to 
other  countries  and  leave  us  with  silver  dollars  worth 
simply  what  silver  bullion  might  sell  for  in  the  market. 
—  "With  both  metals  as  primary  money  property 
advances  to  bimetallic  prices,  whether  gold  goes  to  a 
premium  or  not."  In  1864  the  coins  of  both  metals 
were  what  Mr.  Harvey  calls  primary  money.  Under 
the  law  both  metals  were  entitled  to  free  coinage,  and 
yet  the  prices  current  were  prices  established  in  a 
paper  currency,  worth  40  cent^  in  gold,  and  still  less 
in  silver,  ll  is  the  money  in  circulation  which  fixes 
the  prices  ol  commodities,  and  not  the  money  which 
no  one  sees  or  handles,  i  he  instant  go.d  gees  to  a 
premium  it  ceases  to  circulate,  ceases  to  be  u sea  in 
the  payment  of  debts  or  the  purchase  ol  commodiiies, 
and  we  have  thenqeijarth,. either  si>ei;  prices  or  paper 
money  prices.  ,  ;     ',;.', 

,  .j-T-"' There  should  be  a  aw  making  it  a  forfeiture  of 
the  debt  to  discriminate  m  favor  of  one  form  of  national 
currency  against  another'  ^P  138;.  Such  a  law 
would  be  at  va-iance  with  the  constitution  of  the 
United  States ;  an  abridgement  of  the  personal  liberty 
of  the  citizen  ;  a  denial  to  h.m  ot  the  righ^  to  make 
contractb  for  whatever  property  or  money  he  saw  fit. 
But  if  this  were  not  the  case  a  iaw  such  as  Mr.  Harvey 
suggests  would  increase  the  difficulty  aimed  at  instead 
ol  overcrming  it.  He  .s  by  no  means  the  firs^  man 
who  has  sought  to  compel  men  to  accept  in  exchange 
for  their  commodities  what  they  did  not  want  and 
would  not  have.  The  history  oi  France  wiil  afford 
interesting  and  useful  lessons  on  th's  ooint.  Arbitrary 
and  unjust  raws,  having  in  view  the  end  suggested, 
have  never  in  a  single  'nstance  becE  successVlly  en- 


"COIN'S  FINANCIAL  SCHOOL."  73 

forced,  and  they  never  will  be  so  long  as  men  are  free 
and  able  to  distinguish  between  right  and  wrong. 

— "  Put  less  gold  in  the  gold  dollar.  Bring  the 
weight  of  the  gold  dollar  down  till  they  (silver  and 
gold)  are  on  a  parity."  (P.  138).  The  end  which  Mr. 
Harvey  seeks  has  been  apparent  from  the  outset.  He 
desires  a  cheap  dollar  —  a  50-cent  dollar  with  which  to 
pay  100-cent  debts.  He  is  a  little  too  timid  to  break 
into  another  man's  strong  box,  but  evidently  not  too 
good.  He  therefore  seeks  legal  authority  to  commit  a 
larceny.  "Put  less  gold  in  the  gold  dollar" — return 
less  money  than  you  borrowed  —  less  than  you  agreed 
to  pay.  Lie  and  then  steal;  promise  and  not  fulfill; 
get  possession  of  your  neighbor's  property  by  hook  or 
crook  and  then  hold  to  it  with  the  grip  of  a  vise.  This 
is  the  philosophy  of  satan,  and  hell  is  the  only  region 
where  a  scheme  of  finance  based  on  Mr.  Harvey's 
theories  will  ever  be  approved. 


SIXTH  CHAPTER— Concluded. 


yy^r  s  it  not  a  fact  that  no  estimate  has  been  placed  on 
^^\  American  ( United  States )  bonds  held  in  Europe 
^  at  less  than  5,000  million  dollars."  (P.  139.) 
If  it  were  a  fact,  what  of  it  ?  The  promise  to  pay  5,000 
millions  is  just  as  binding  on  the  honor  and  consciences 
of  men  as  the  promise  to  pay  500  thousand.  The 
amount  of  our  indebtedness  is  not  in  this  connection  a 
pertinent  question  for  discussion.  The  issue  is.  Shall 
we  do  as  we  agreed  and  pay  our  debts  in  as  good 
money  as  we  borrowed,  or  shall  we  repudiate  one-half 
of  what  we  owe,  and  stand  disgraced  in  the  eyes  of 
the  civilized  world? 

It  is  not,  however,  a  fact  that  the  United  States 
bonds  held  in  Europe  amount  to  5,000  million  dollars. 
Railroad  bonds  and  stocks,  mining  bonds  and  stocks, 


74  ANSWER  TO 

and  what  are  known  as  industrial  bonds  and  stocks 
have  been  held  abroad  in  large  amounts  —  in  much 
larger  amounts  than  at  present,  and  all  are  included 
under  the  head  of  American  securities ;  but  there  is  a 
wide  difference  between  a  stock  and  a  bond.  Th« 
foreign  owner  of  the  former  is  a  part  owner  of  th« 
railroad,  mine  or  industrial  enterprise.  If  it  earns  no 
dividend  he  gets  none.  In  brief,  he  simply  shares 
with  the  American  stockholders  in  the  losses  or  the 

Srofits  of  the  property  his  money  helped  to  create. 
londs,  on  the  other  hand,  represent  borrowed  money 
and  are  secured  by  mortgage  on  the  property  or  prop- 
erties referred  to.  In  case  the  principal  or  interest  of 
these  bonds  is  not  paid  according  to  the  terms  of  the 
contract,  the  property  may  be  sold.  If  sold  for  enough 
to  pay  the  debt  the  creditor  loses  nothing.  If  the  pro- 
ceeds of  the  sale  are  insufficient  to  pay  the  debt  the 
foreign  as  well  as  the  American  bondholders  sustain 
a  loss ;  but  in  either  case  the  great  mass  of  our  people, 
including  farmer,  laborer,  tradesman,  mechanic,  lose 
nothing  whatever.  The  road,  mine  or  manufactory 
does  not  cease  to  exist  when  sold  and  resold,  and  the 
country  not  only  has  all  it  ever  had,  but  much  more 
than  it  would  have  had  if  the  foreign  capitalist  had 
not  put  money  into  the  enterprise  and  so  helped  to 
start  it,  I  think  it  will  be  found  that  foreign  capitalists 
have  not  made  large  amounts  of  money  by  their  invest- 
ments in  American  properties  and  the  purchase  of 
American  securiiies.  The  old  Atlantic  and  Great 
Western  Railway  and  many  other  lines  which  persons 
familiar  with  the  history  of  the  railroads  of  the  country 
can  readily  call  to  mind  will  suggest  instances  in  which 
foreign  investors  put   millions   into  American   enter- 

6 rises  and  took  little  or  nothing  out.  The  fact  is, 
ncle  Sam's  nephews  have  pestered,  bulldozed  and 
swindled  the  British  lion  until  the  venerable  beast  has 
grown  somewhat  reluctant  to  gambol  for  their  amuse- 
ment and  profit  in  the  great  jungle  of  American 
securities.  It  will  be  remembered,  also,  with  some 
degree  of  satisfaction  to  Mr.  Harvey  and  his  friends 
that  a  few  years  ago  the  old  beast's  tail  was  so  cruelly 


'  COIN'S  PINANCIi-L  SCHOOL."  7g 

twisted  in  our  neighboring  Republic  of  Argentina  that 
the  world  was  startled  by  his  howls  of  anguish.  The 
promoter  of  railroad,  mining  and  industrial  schemes, 
who  now  takes  American  securities  to  the  English  or 
German  market,  as  a  rule,  finds  no  demand  for  them 
and  returns  to  his  own  country,  saddened  by  the  reflec- 
tion that  for  individuals  as  well  as  nations  "  honesty  i« 
the  best  policy." 

The  national  banks  are  required  by  law  to  buy  and 
deposit  United  States  bonds  with  the  government  as 
security  for  their  circulation  and  public  deposits.  But 
by  far  the  larger  part  of  these  bonds  are  held  by  sav- 
ings banks  and  life  insurance  and  trust  companies  as 
low  interest  investments  which  may,  if  need  arises, 
be  speedily  converted  into  money.  These  institutions 
also  nold  the  bulk  of  the  State,  county,  and  municipal 
bonds  of  the  country.  The  probabilities  are  that  at 
least  three-fourths  of  the  bonds  of  the  general  govern- 
ment and  of  the  bonds  of  the  States,  counties,  and 
cities  of  the  United  States  as  well  are  held  by  our  own 
people,  and  that  at  least  half  of  the  interest  accruing 
on  them  is  distributed  to  depositors  in  savings  banks 
and  the  beneficiaries  of  trust  funds. 

But  let  us  waive  all  this  and  for  the  sake  of  argu- 
ment assume  what  we  know  to  be  untrue,  to-wit : 
That  United  States  bonds  representing  not  less  than 
5,000  million  dollars  are  held  in  Europe.  Now,  what 
shall  we  do  with  respect  to  them  ?  We  borrowed  the 
money  and  used  it  for  our  own  purposes ;  shall  we  do 
as  we  agreed  and  pay  the  debt  like  honest  men,  or 
shall  we  repudiate  the  whole  or  the  half  of  it?  In 
1892  we  sold  commodities  abroad  amounting,  in  value, 
to  over  1,000  million  dollars.  Suppose  the  people  to 
whom  we  sold  this  vast  amount  had,  by  a  legislative 
trick,  compelled  us  to  accept  in  payment  dollars  worth 
50  cents  each,  and  so  cheated  us  out  of  500  million 
dollars,  what  would  we  have  said  of  them  ?  Shall  we 
do  unto  others  what  we  would  not  have  others  do 
unto  us? 

"  We  have  put  our  head  into  the  mouth  of  the 
English  lion."     (P.  140.)     Did  we  carry  our  head  to 


76  ANSWER  TO 

England  to  do  i*  ?     If  so,  let  the  lion  "chaw";  the 
fewer  such  heads  the  better. 

"  What  she  i  P]ngland)  failed  to  do  with  shot  and 
shell  in  the  eighteenth  century  she  is  doing  with  the 
gold  standard  in  the  nineteenth  century."  (P.  140.) 
This  is  simply  the  jingoism  of  fools.  England  is  at- 
tending strictly  to  her  own  business,  and  not  troubling 
herself  about  ours.  It  matters  not  a  farthing  to  her 
what  money  we  use  at  home,  or  what  we  do,  so  long 
as  in  our  dealings  with  her  we  do  as  we  agree,  and  if 
she  were  to  fail  to  fulfill  her  promises  to  us  we  would 
denounce  her  as  a  repudiator  and  have  some  reason  to 
talk  of  war. 

"  It  is  a  fixed  law  in  the  science  of  money  that 
when  both  metals  are  primary  money  —  whether  at 
the  time  seeking  the  mints  or  not,  and  whether  in  cir- 
culation or  not — bimetallic  prices  prevail."  (P.  141.) 
There  is  no  such  law.  There  is  a  law,  however,  known 
as  Gresham's  law,  recognized  as  operative  the  world 
over,  by  which  cheap  money,  if  endowed  with  the 
legal  tender  quality  always  drives  the  dearer  or  better 
money  out  of  circulation.  The  man  who  has  a  debt 
to  pay  pays  in  the  cheapest  and  poorest  money  he  can 
use;  the  man  who  desires  to  buy  buys  with  the  cheapest 
money  he  can  give,  and  hence  this  cheaper  money 
fixes  the  prices  of  commodities.  From  1810  to  1834 
silver  was  the  cheaper  money  in  this  country;  gold 
abandoned  us,  and  values  were  estimated  in  silver. 
From  1834  to  1861  gold  was  the  cheaper  money  and 
the  prices  were  gold  prices.  From  1861  to  1879  we 
had  paper  money  prices.  From  1879  to  the  present 
day  we  have,  by  limiting  the  coinage  of  silver,  kept 
the  two  metals  on  a  parity  at  the  ratio  of  16  to  1. 
Since  1879,  therefore,  we  have  had  bimetallic  prices, 
and  these  are  the  prices  we  propose  to  continue. 

"  All  we  would  have  to  do  would  be  to  put  an  ex- 
cessive tarifi"  on  all  imports  coming  from  her  (England) 
and  all  other  countries  having  a  gold  standard  until 
they  adopted  a  bimetallic  system  with  the  same  ratio 
as  ours."     (P.  142.) 


"  COIN'S  FINANCIAL  SCHOOL."  77 

Mr.  Harvey  does  not  at  heart  favor  an  international 
agreement.  He  desires  a  cheaper  dollar  than  interna- 
tional free  coinage  would  give  him,  and  if  he  has  any 
practical  business  sense  at  all,  he  probably  has  enough 
to  know  that  the  method  he  suggests  would  render  the 
consummation  of  an  international  arrangement  impos- 
sible. Neither  England,  Germany,  France,  nor  any 
other  nation,  entertaining  a  decent  regard  for  its  honor, 
could  be  forced  to  abandon  its  own  monetary  system 
and  to  co-operate  with  us  by  the  imposition  of  exces 
sive  tariffs  upon  its  products,  or  by  threats  of  war. 
Commerce  is  mainly  an  exchange  of  products ;  "  so 
much  exported,  so  much  imported."  Suppose  we  were 
to  prohibit  the  importation  of  the  products  of  other 
nations  with  a  view  to  coercing  them  into  an  abandon- 
ment of  the  gold  standard,  would  they  not  at  once  re- 
taliate by  excluding  our  wheat.  Hour,  beef,  pork,  etc., 
from  their  markets?  What  would  these  products  be 
worth  to  the  farmers  of  the  United  States  if  Europe 
were  to  refuse  to  buy  them?  Russia,  India,  Australia. 
South  America,  and  British  North  America  are  now  our 
strong  competitors  in  the  production  of  food  stuffs,  and 
if  we  retain  the  balance  of  trade  in  our  favor,  we  must 
be  guided  by  better  counsel  than  that  given  to  us  by 
the  free  silver  cranks  of  the  United  States. 

"  Reduce  the  number  of  grains  in  the  gold  dollar 
until  it  is  the  same  value  as  the  silver  dollar.  We  can 
legislate  the  premium  out  of  gold  "  (p.  143).  It  is  pos- 
sible to  do  a  great  many  unwise  things  by  legislation, 
but  nothing  more  foolish  and  more  detrimental  to  the 
business  of  the  United  States  and  the  commercial 
honor  of  its  people  could  be  done  than  the  shameful 
act  suggested. 

"  Give  the  people  back  their  favored  primary  money 
Give  us  two  arms  with  which  to  transact  business"  (p. 
143).  Mr.  Harvey  wants  a  long  arm  to  buy  and  borrow 
with  and  a  short  arm  to  sell  and  pay  debts  with.  If  he 
simply  desired  arms  of  equal  length  he  would  now  have 
no  reason  to  complain.  In  this  country  we  have  some 
500  millions  of  silver  dollars,  and  600  millions  or  more 
of  gold  dollars,  and  the  silver  dollars  are  just  as  good 


78  ANSWER  TO 

in  the  payment  of  debts  and  the  purchase  of  property 
as  the  gold.  The  truth  is,  the  people  now  have  what 
Mr.  Harvey  calls  "  their  favored  primary  money  "  in 
greater  abundance  than  they  ever  had  it  before — 1,000 
million  dollars  more  of  it  than  they  had  in  1873. 

Products,  to  all  intents  and  purposes,  constitute  the 
primary  money  of  the  world;  they  not  only  redeem 
each  other,  but  they  redeem  the  gold  and  silver  coin, 
the  checks,  bank  notes,  and  all  the  modern  devices  of 
the  merchant  for  the  rapid  and  convenient  transaction 
of  business.  The  minted  metal,  or  the  printed  paper, 
derives  its  value  as  a  medium  of  exchange  solely  from 
tlie  fact  that  it  is  redeemed  on  demand  in  the  original 
primary  universal  and  ultimate  redeemer  of  all  things, 
to- wit ;  the  commodities  which  men  desire ;  and  when 
Mr.  Harvey  speaks  of  silver  or  gold  as  property  money, 
commodity  money,  primary  money,  and  the  money  of 
ultimate  payment,  as  if  it  were  at  the  base  of  the  world's 
commercial  structure,  he  talks  the  silliest  nonsense. 

"  The  farmer  of  Mexico  sells  his  bushel  of  wheat  for 
one  dollar  " — a  dollar  worth  fifty  cents — "  the  farmer  of 
the  United  States  sells  his  bushel  of  wheat  for  fifty 
cents '' — and  obtains  for  it  as  much  money  as  the  Mex- 
ican gets  for  his — "  the  former  is  proven  by  the  history 
of  the  world  to  be  an  equitable  price."  The  history  of 
the  world  is  silent  on  this  subject;  Mr.  Harvey  is  doing 
the  lying  just  now,  not  history — "The  latter  is  writing 
its  history  in  letters  of  blood,''  etc.  (p.  142).  The  writ- 
ing referred  to  is  being  done  in  Mr.  Harvey's  redhot 
imagination,  not  elsewhere,  for  in  the  case  cited  the 
United  States  farmer  and  the  Mexican  farmer  get  ex- 
actly the  same  value  in  money  for  their  respective 
bushels  of  grain. 

"  We  are  now  the  ally  of  England."  (P.  145).  On 
page  135  we  were  just  about  to  engage  in  a  struggle 
-vrith  England  "  for  the  mastery  of  the  commerce  of 
the  world,"  and  this  "  combat "  could  not  "be  avoided." 
On  page  140  "our  head  was  in  the  mouth  of  the 
English  lion,"  but  now  we  are  "  the  ally  of  England." 
The  rapidity  with  which  Mr.  Harvey  changes  the  rela- 
tions existing,  or  supposed  to  exist,  between  great 


"  COIN'S  FINANCIAL  SCHOOL."  79 

nations,  is  marvelous.  On  one  page  we  have  threats 
of  war.  in  the  next  deadly  peril,  and  in  still  another 
peace  and  amity.  Such  sudden  transitions  from  ferocity 
to  friendliness,  without  apparent  cause,  leave  us 
amazed  at  the  fickleness  and  foolishness  of  nations. 

"Our  people  are  losing  each  year  hundreds  ol 
millions  of  dollars."  (P.  145).  How?  Simply  by  pay- 
ing their  honest  debts  —  by  not  stealing  the  money 
they  borrowed,  or  the  farms  they  bought  on  time,  or 
the  merchandise  they  obtained  on  credit,  or  the  rail- 
roads they  built  with  other  people's  money  The  enter- 
prising young  man  in  our  penitentiary  who  made  $  100 
by  stealing  a  watch,  lost  $100  when  the  cruel  law  got 
its  clutches  on  him.  Instances  like  this  must  be  some- 
what discouraging  to  Mr.  Harvey  and  his  friends 

*'  The  deputy  sheriff  regards  the  $  4  a  day  he  gets 
as  more  important  to  him  than  the  life  or  the  cause  of 
the  workmen  he  shoots  down."  (P.  146)  If  so,  he  is 
a  bad  deputy  sheriff  and  would  come  high  at  $  1  a  day. 
Why  do  not  the  people  of  Chicago  insist  upon  a  more 
competent  man  for  the  place?  This  is  a  matter  they 
can  control  without  an  international  agreement  or  even 
an  act  of  Congress. 

"  The  Pullman  Palace  Car  Company  recently  re- 
duced the  already  low  wages  of  its  employes."  (P.  146). 
Would  the  independent  free  coinage  of  silver  and  a 
fifty-cent  dollar  render  it  impossible  for  the  Pullman 
Car  Company  to  reduce  wages  ?  Would  not  the  fifty- 
oent  dollar  in  effect  reduce  the  wages  of  workingmen 
one-half  without  any  action  whatever  on  the  part  of 
the  employer  ? 

"  We  are  forced  to  take  independent  action ;  to 
hesitate  is  cowardly."  (P.  146).  Mr.  Harvey's  utter- 
ances remind  us  of  the  fighting  instinct,  flowing  dic- 
tion and  business  habit  of  Ancient  Pistol,  who,  when 
dunned  for  eight  shillings,  exclaimed  : 

"  Base  is  the  slave  that  pays  !  " 

John  Biatty. 


[Bt  Permission  of  thk  Honokablr  Secrktaky  of  thb  TreaswrtJ 


OP 


Hon.  JOHN  G.  CARLISLE, 

AT 

Memphis,  Tenn.,  Thursday,  May  23,  1895. 


3fr.  Presideyit  and  Gentlemen  of  the  Convention : 

^  DO  NOT  think  the  importance  of  the  questions  you 
,^\  are  called  to  consider  can  be  overestimated, or  that 
the  f2;ravity  of  the  situation  can  be  overstated.  The 
proposition  to  revolutionize  our  monetary  system  and 
thus  destroy  the  credit  of  the  government  and  the  people 
at  home  and  abroad,  violate  the  obligations  of  all  con- 
tracts, unsettle  all  exchangeable  values,  reduce  the 
wages  of  labor,  expel  capital  from  our  country,  and 
seriously  obstruct  the  trade  of  our  people  among  them- 
selves and  with  the  peoples  of  other  countries,  is  one 
which  challenges  the  intelligence,  patriotism,  and  com- 
mercial honor  of  every  man  to  whom  it  is  addressed. 
No  matter  what  may  be  the  real  purposes  and  motives 
of  tliose  who  make  the  proposition  to  legalize  the  free 
and  unlimited  coinage  of  silver  at  a  ratio  of  16  to  1, 
tliese  are  the  consequences  involved  in  their  scheme, 
and,  in  ray  opinion,  they  can  not  be  avoided  if  it  should 
be  adopted.  In  no  part  of  the  country  will  the  conse- 
quences of  such  a  policy  prove  more  injurious  to  the 
material  interests  of  the  people  than  in  the  undevel- 
oped  and   progressive  South.     When  the   great  civil 


82  THE  MONEY    QUESTION. 

war  closed  your  industrial  system  was  destroyed,  your 
commercial  relations  were  all  broken  up,  your  currency 
was  worthless,  your  farms  were  devastated,  your  mines 
were  closed,  your  forests  were  untouched,  j^our  water 
power  was  useless,  and  your  railways  were  unsafe  and 
inadequate,  even  for  the  limited  service  they  had  to 
perform;  but  your  great  natural  resources  were  still 
unimpaired,  and  upon  that  foundation  you  have  con- 
structed, and  are  still  constructing,  a  system  of 
diversified  industries  and  interstate  and  international 
commerce  which,  if  not  disturbed  by  unwise  experi- 
ments in  financial  legislation,  must  attract  to  your 
section  of  the  country  all  the  active  capital  and  skilled 
labor  necessary  to  make  it  the  most  prosperous  part  of 
the  continent.  Your  magnificent  deposits  of  coal  and 
iron,  your  fertile  soil,  adapted  to  the  growth  of  cotton, 
sugar,  and  many  other  products  which  no  other  part 
of  the  cowitry  will  yield,  your  unrivaled  facilities  for 
the  manufacture  of  iron  and  steel,  cotton  goods,  lumber, 
oil,  furniture,  and  almost  innumerable  other  articles 
which  can  be  cheaply  produced  from  the  raw  materials 
within  your  limits,  constitute  the  elements  of  a  mar- 
velous growth  and  prosperity  which  nothing  can  pre- 
vent if  the  people  of  the  South  will  continue  to  exhibit 
in  the  future  the  same  spirit  of  conservatism  and  the 
same  devotion  to  principle  that  have  always  character- 
ized them  in  the  past.  The  world  has  never  witnessed 
a  grander  exhibition  of  courage  and  fortitude  than  was 
presented  here  when  a  defeated  and  impoverished 
people,  without  money  or  credit,  and  almost  destitute 
of  the  tools  and  implements  necessary  to  the  per- 
formance of  manual  labor,  went  uncomplainingly  to 
work  to  re-establish  their  social  order,  renew  their 
commercial  relations,  and  reconstruct  their  industrial 
system ;  and  I  am  unwilling  to  believe  that  the  same 
people  can  now  be  so  discouraged  by  a  temporary 
business  depression,  or  so  moved  by  appeals  to  their 
prejudices,  that  they  will  hastily  resort  to  new  and 
hazardous  experiments  with  the  currency  in  which  all 
their  transactions  must  be  conducted. 


THE  MONEY    QUESTION.  83 


ARGUMENTS,    NOT    MOTIVES,   IMPEACHED. 

I  do  not  charge  that  our  fellow-citizens  who  propose 
to  revolutionize  our  monetary  system  by  a  sudden 
change  in  the  standard  of  value  really  desire  to  see 
the  business  of  the  country  ruined,  or  even  injured, 
or  that  they  believe  any  injurious  consequences  would 
follow  the  adoption  of  their  policy;  but,  in  my  judg- 
ment, the  results  would  be  most  disastrous  to  the 
material  interests  of  all  the  people  in  every  part  of 
the  country;  and,  therefore,  I  shall  appeal  to  them 
carefully  to  review  the  grounds  upon  which  their 
opinions  have  been  formed  before  it  is  too  late  to  cor- 
rect a  possible  mistake  upon  a  subject  of  such  supreme 
importance  to  themselves  and  to  their  posterity.  It  is 
not  necessary  to  impeach  their  motives  in  order  to 
answer  their  arguments,  nor  would  it  be  wise  or  proper 
to  underestimate  the  intellectual  and  material  forces 
behind  this  great  popular  movement  in  the  South  and 
West  —  a  movement  which  now  seriously  threatens 
to  disrupt  existing  political  organizations  and  reform 
party  lines ;  but,  no  matter  what  may  be  the  motives 
or  the  present  numerical  strength  of  our  opponents  in 
this  controversy,  the  merits  of  the  policy  they  propose 
to  inaugurate  must  be  subjected  to  the  tests  of  reason 
and  experience,  and  if  it  is  shown  to  be  impracticable, 
or  fundamentally  wrong  in  principle,  we  may  be  con- 
iident  that  it  will  not  finally  command  the  support  of 
a  majority  of  our  people. 

METAL   FIXES    VALUE   OF   COIN,   NOT   COIN   OF  METAL. 

Before  proceeding  to  the  discussion  of  the  main 
question  presented,  it  may  be  advantageous  to  state  as 
briefly  as  possible  a  few  admitted  or  well-established 
facts  having  an  important  bearing  upon  it.  From  the 
earliest  times  gold  and  silver  have  been  used  as  money, 
not  because  there  was  at  the  beginning  any  law  declar- 
ing them  to  be  money,  but  because,  by  reason  of  their 
limited  and  regular  supply,  their  great  value  as  com- 
pared with  other  things  in  proportion  to  weight  and 


g4  THE   MONEY    QUESTION. 

bulk,  and  their  durability,  they  were  more  stable  and 
convenient  than  any  other  commodity  as  measures  of 
value  in  making  exchanges.  Consequently,  these 
metals  were  used  as  money  by  common  consent  of  the 
people  for  centuries  before  there  was  any  law  upon  the 
subject  or  any  coins  in  existence ;  they  passed  by 
weight,  and  their  values  in  effecting  exchanges  were 
determined  by  the  quantity  of  pure  metal  contained  in 
each  piece.  Each  metal  had  a  distinct  value  of  its 
own,  and  when  it  was  used  in  trade  neither  the  buyer 
nor  seller  troubled  himself  about  the  ratio  between  it 
and  the  other  metal.  The  laws  of  trade  fixed  and 
regulated  the  actual  and  relative  values  of  both  metals 
in  the  purchase  and  sale  of  other  commodities  just  as 
they  do  now.  They  had  been  used  as  money  several 
centuries  before  any  government  undertook,  by  royal 
proclamation  or  statute  law,  to  establish  a  ratio  be- 
tween them,  and  when  this  character  of  legislation  was 
first  begun  the  public  authorities  did  not  attempt  to 
establish  new  values  or  new  ratios,  but  accepted  those 
already  fixed  by  the  laws  of  trade  and  the  custom  of 
merchants.  Coins  were  made,  not  for  the  purpose  of 
attempting  to  add  anything  to  the  intrinsic  or  exchange- 
able value  of  the  metal  contained  in  them,  but  for  the 
purpose  of  attesting,  by  public  authority,  its  weight 
and  purity,  thus  avoiding  the  delay  and  uncertainty 
resulting  from  the  practice  of  weighing  each  piece  as 
it  passed  from  one  to  another.  That  the  coinage  of  the 
metals  does  not  now  add  anything  to  their  actual  value 
in  the  commercial  world  is  conclusively  proved  by  the 
facts  that  in  all  the  great  transactions  between  the 
people  of  different  countries  the  coins  are  accepted 
only  at  their  bullion  value,  determined  by  their  actual 
weight  and  fineness,  and  that  bullion  itself  is  still  used 
in  making  payments,  just  as  it  was  thousands  of  years 
ago.  Whatever  effect  legislation  upon  the  ratios,  in  con- 
nection with  legal  tender  laws,  may  have  had  upon  the 
use  of  the  two  metals  in  the  payment  of  antecedent 
de-bts,  it  has  never  had  the  slightest  effect  upon  the 
jictual  or  relative  values  of  the  two  metals  in  national 
or  international  trade.     For  many  centuries,  even  after 


THE   MONEY    QUESTION.  85 

the  commerce  of  the  world  had  grown  to  enormous 
proportions,  the  propriety  of  making  any  given  quantity 
of  bullion,  or  any  particular  coin,  a  legal  tender  was 
not  even  suggested,  and  up  to  the  present  time  there 
is  no  legal  tender  in  international  trade.  Whether 
payments  are  made  in  gold  or  silver  coins,  or  in  gold 
or  silver  bullion,  actual  intrinsic  value  determines  the 
amount  or  quantity  to  be  delivered,  no  matter  what 
may  be  the  legal  tender  laws  of  the  different  countries, 
and  no  matter  though  they  may  have  the  same  or 
different  ratios  of  value  between  the  metals  within 
their  respective  limits.  The  law  of  France,  for  in- 
stance, places  a  higher  value  upon  silver  relatively  to 
gold  than  is  placed  upon  it  by  the  laws  of  the  United 
States,  the  French  ratio  being  15^  to  1,  and  ours  being 
16  to  1 ;  but  if  sixteen  pounds  of  our  silver,  coined  or 
uncoined,  were  sent  to  that  country  to  be  used  in  the 
paymeni  of  a  debt  or  in  the  purchase  of  commodities, 
it  would  net  be  accepted  at  the  ratio  of  15^  to  1,  or  at 
the  ratio  of  IG  to  1  as  compared  to  gold,  but  only  at 
the  ratio  of  about  32  to  1,  which  shows  that  neither 
our  ratio  nor  the  French  ratio  has  any  effect  whatever 
upon  the  value  or  purchasing  power  of  the  metal  itself. 
Coinage  is  free  in  Mexico,  and  the  dollar,  which  is  full 
legal  tender,  contains  377.17  grains  of  pure  silver, 
while  our  dollar  contains  only  871.25  grains  of  pure 
silver ;  yet  Mexican  silver  dollars  are  sent  into  the 
United  States  and  other  parts  of  the  world  and  sold  at 
the  price  of  the  bullion  contained  in  them,  which  is 
about  one-half  their  nominal  or  legal  value  in  their 
own  country.  The  legal  tender  laws  affect  the  debt- 
paying  power  of  the  coin  itself  in  the  country  where 
the  laws  prevail,  but  the  laws  establishing  ratio  do  not 
affect  the  value  of  the  metal  contained  in  the  coins 
either  at  home  or  abroad,  because  it  is  the  metal  tliat 
fixes  the  value  of  the  coin,  and  not  the  coin  that  fixes 
the  value  of  the  metal. 

RATIO    OF    COIN    TO    CREDIT. 

For  a  long  time,  during  the  early  history  oT  the 
world,  and  even  during  the  medieval  age,  gold  and  sil- 


83  THE  MONEY   QUESTION. 

ver,  in  bullion  or  in  the  form  of  coins,  constituted 
almost  the  entire  circulation  among  the  people,  even  in 
the  nations  most  advanced  in  trade  and  civilization, 
and  consequently  the  quantity  of  these  metals  that 
could  be  procured  and  kept  in  use  was  a  question  of 
far  greater  importance  then  than  it  is  now  or  ever  can 
be  in  the  future.  When  life  and  property  had  been 
made  reasonably  secure  by  the  establishment  of  stable 
governments,  and  regular  processes  were  authorized 
for  the  enforcement  of  pecuniary  obligations,  credit  or 
confidence  largely  took  the  places  of  bullion  and  coin 
in  the  commercial  transactions  of  the  people,  and  a 
much  smaller  amount  of  metallic  money  was  required 
in  proportion  to  the  whole  volume  of  business  done 
than  had  been  required  before.  The  use  of  credit  in 
the  form  of  bank  notes,  checks,  bills,  and  other  evi- 
dences of  debt  had  so  increased  in  modern  times  that 
in  all  highly  organized  commercial  communities  the 
use  of  coin,  except  in  making  change,  had  been  almost 
entirely  dispensed  with.  The  percentage  of  coin  ac- 
tively employed  in  conducting  business  in  this  country 
is  so  small  that  it  is  almost  inappreciable;  so  small,  in 
fact,  that  its  disuse  in  our  transactions  would  not  be 
felt  if  we  had  a  substitute  for,  or  a  paper  representa- 
tive of,  the  subsidiary  pieces.  In  England,  France,  and 
some  other  countries  a  larger  amount  of  coin  is  used, 
because  they  have  no  very  small  notes. 

Although  we  have  the  gold  standard,  or  measure  of 
value  in  this  country,  our  actual  stock  of  gold  bullion 
and  coin  amounts  to  only  about  one-third  of  our  actual 
currency  —  a  condition  of  afi'airs  which  would  have 
been  inconceivable  a  few  centuries  ago.  We  have 
about  $  625,000,000  in  gold,  $  397,652,873  in  full  legal 
tender  silver,  $346,681,000  in  old  United  States  notes, 
$  149,584,471  in  Treasury  notes  issued  in  the  purchase 
of  silver  bullion,  $  209,719,850  in  national  bank  notes, 
and  $  76.169,569  in  subsidiary  silver  coin,  making  in  all 
$  1,804,707,763,  exclusive  of  the  minor  coins,  and  every 
dollar  of  this  vast  volume  of  currency  is  kept  equal  in 
value  to  the  standard  established  by  law,  so  that  every 
man  who  receives  a  silver  dollar  or  paper  dollar  in  ex- 


THE  MONEY    ^^UESTION.  87 

change  for  his  products,  or  in  satisfaction  of  a  debt, 
gets  just  as  good  a  dollar  as  the  man  who  receives  gold. 
This  is  the  monetary  system  and  this  is  the  financial 
condition  which  the  advocates  of  free  coinage  at  the 
ratio  of  16  to  1  now  propose  to  revolutionize  at  once  by 
a  change  in  the  standard  of  value,  so  that  the  whole 
mass  of  circulation  left  for  the  use  of  the  people  would 
be  reduced  to  about  one-half  the  purchasing  power  it 
has  now ;  or,  in  other  words,  so  that  it  would  require 
about  double  the  amount  of  currency  that  is  required 
now  to  perform  the  same  service  in  the  exchange  of 
commodities.  But  the  consummation  of  such  a  policy 
would  produce  results  more  far-reaching  and  disastrous 
than  the  mere  reduction  of  the  standard  of  value;  be- 
cause, for  a  long  time,  at  least,  credit,  which  constitutes 
by  far  the  most  important  factor  in  our  financial  and 
commercial  transactions,  would  be  substantially  de- 
stroyed by  the  confusion  and  uncertainty  necessarily 
following  such  a  great  and  sudden  change  in  our  mon 
etary  system. 

A    PHYSICAL    AND    METAPHYSICAL    ABSURDITY. 

But  it  is  contended  by  a  large  number  of  the  advo- 
cates of  free  coinage  —  perhaps  a  majority  of  them  — 
that  the  effect  of  their  policy  would  be,  not  to  abolish 
the  present  standard  of  value,  and  substitute  the  single 
silver  standard  in  its  place,  but  that  it  would  establish 
what  they  call  bimetallism  and  a  double  standard.  I 
confess  my  inability  to  understand  what  is  really 
meant  by  a  double  standard  or  measure  of  value  ;  the 
idea  is  incomprehensible  to  my  mind,  because  I  can 
not  conceive  how  it  is  possible  to  have  two  different 
legal  and  authoritative  measures  of  the  same  thing  in 
use  at  the  same  time,  as,  for  instance,  a  pound  weigh- 
ing sixteen  ounces  and  a  pound  weighing  eight  ounces, 
or  only  half  as  much,  and  both  declared  by  law  to  be 
legal  pounds.  1  agree  entirely  with  Gen.  Jackson's 
Secretary  of  the  Treasury,  who  said  :  "  The  proposition 
that  there  can  be  but  one  standard  in  fact  is  self-evi- 
dent."    The  proposition  to  establish  and  maintain  two 


S8  THE  MONEY   QUESTION. 

different  measures  of  value  to  be  in  use  at  the  sam« 
time,  and  to  be  applied  to  the  same  things  at  the  sam« 
time,  embodies  a  physical  and  metaphysical  absurdity, 
and  this  is  so  evident  that  the  ablest  thinkers  and 
writers  upon  the  subject  have  been  at  last  forced  t© 
abandon  it.  Prof.  Francis  A.  Walker,  one  of  the  most 
distinguished  bimetallists  in  the  United  States  or  in  th« 
world,  in  a  carefully  prepared  paper  recently  published, 
says: 

"  But  one  thing  more  remains  to  be  said  in  this  connection  ; 
that  is,  in  reply  to  the  allegation  of  the  monometallist  writers 
that  the  course  of  events  in  France  which  has  been  recited,  did 
not  constitute  a  genuine  case  of  bimetallism.  If  these  writers 
may  be  permitted  to  impose  their  own  definition  upon  us,  their 
contention  can,  to  a  considerable  extent,  be  made  good.  What 
they  say  is,  that  France  from  1803  to  1873  did  not  enjoy  the  con- 
current circulation  of  the  two  metals,  but  only  an  alternate  cir- 
culation, now  of  one  and  now  of  the  other  ;  and  this,  they  de- 
clare is  not  bimetallism  at  all.  Therefore,  according  to  their 
view,  there  is  no  great  historical  instance  of  the  success  of  bi- 
metallism. 

"  If,  on  the  other  hand,  we  maj'  be  permitted  for  ourselves 
to  say  what  we. mean  and  propose  by  bimetallism,  the  criticism 
in  question  does  not  touch  our  case  at  all.  We  flatly  deny  that 
bimetallism  necessarily  involves  the  concurrent  circulation  of 
the  two  metals.  There  is  some  reason  to  believe  that  the 
French  statesmen  of  1803  really  expected  that  concurrent  cir- 
lation  would  result ;  but  no  bimetallist  nowadays  makes  the 
concurrent  circulation  of  the  two  metals  in  the  same  country  a 
necessity  of  that  system.  If  it  results  only  in  establishing  an 
alternating  circulation,  the  chief  results  of  bimetallism  will 
still  be  achieved,  as  they,  were  by  the  action  of  France." 

This  is  intelligible,  for  we  can  all  understand  how  it 
is  possible  to  have  an  alternating  standard  and  circula- 
tion, sometimes  gold  and  sometimes  silver,  and  the 
monetary  history  of  the  world  proves  that  this  is  just 
what  happens  wlienever  the  two  metals  are  freely 
coined  in  any  country  and  made  full  legal  tender. 
Values  will  always  be  measured  by  the  kind  of  money 
in  actual  circulation,  no  matter  what  the  law  may  de- 
clare, and,  therefore,  if  the  free  and  unlimited  coinage 
of  silver  at  the  ratio  of  16  to  1  should  drive  out  gold 
and  substitute  silver  and  paper  redeemable  in  silver 
in  its  place,  we  should  have  a  single  silver  standard 


THE  MONEY   QUESTION.  8t 

and  actual  silver  monometallism.  Instead  of  using 
both  gold  and  silver  as  we  do  now  in  larger  amounts 
than  ever  before  in  our  history,  we  should  instantly  ex- 
pel the  more  valuable  metal  from  the  country  and 
make  the  other  the  sole  basis  of  our  currency.  We 
have  now  practical  bimetallism  —  the  use  of  both 
metals  as  money ;  we  should  have  then  practical  mono- 
metallism—  the  use  of  only  one  metal  as  money.  This 
is  neither  speculation  nor  prophecy,  but  a  conclusion 
based  on  facts  established  by  the  experience  of  all  na- 
tions in  all  ages. 

THE   FREE   COINAGE   PROPOSITION   STATED.  » 

In  order  to  eliminate  all  irrelevant  matter  and 
simplify  the  argument,  allow  me  to  state  exactly  what 
the  proposition  now  pending  before  tlie  people  is: 
It  is  proposed  that  the  United  States,  v/ithout  the  co- 
operation or  assistance  of  any  other  government,  shall 
provide  by  law  that  all  the  silver  bnl.Uon,  or  foreign  sil- 
ver coins,  that  may  be  presented  at  the  mints  by  indi- 
viduals or  corporations,  foreign  or  domestic,  shall  be 
coined,  at  the  public  expense,  into  silver  dollars,  at  the 
ratio  of  16  to  1  with  gold  —  that  is,  that  sixteen  pounds 
of  silver  shall  be  considered  equal  in  value  to  one 
pound  of  gold,  and  the  weights  of  the  coins  shall  be 
adjusted  accordingly  —  and  that  the  coins  so  made  at 
the  public  expense  shall  be  delivered  to  the  owners  of 
the  bullion  or  foreign  silver  coins,  as  the  case  maybe, 
and  all  the  people  of  the  United  States,  but  noljody 
else,  shall  be  compelled  by  law  to  receive  them  as 
dollars  of  full  value,  in  the  payment  of  debts  due  to 
them  from  their  own  fellow-citizens  and  from  the  citi- 
zens or  subjects  of  other  countries.  It  is  not  proposed 
that  the  citizens  or  subjects  of  other  countries,  with 
whom  our  people  trade,  shall  be  compelled  to  receive 
these  silver  dollars  in  their  transactions  with  us,  be- 
cause that  can  be  done  only  by  international  agree- 
ment, and  our  impatient  free  coinage  friends  declare 
their  determination  to  proceed  at  once  independently 
of  all  other  governments.     All  who  are  indebted  to  us 


90  THE  MONEY   QUESTION. 

are,  therelbre,  to  have  the  privilege  of  paying  in  silver, 
wnile  all  to  whom  we  shall  become  indebted  are  to  have 
the  privilege  of  requiring  us  to  pay  in  gold. 

Measured  by  their  purchasing  power  in  the  markets 
of  the  world,  which  is  the  only  real  test,  the  relative 
value  of  silver  bullion  to  gold  bullion  is  about  32  to  1 ; 
that  is,  it  requires  in  all  countries,  silver  standard 
countries  as  well  as  gold-standard  countries,  about.  32 
pounds  of  silver  bullion  to  procure  the  same  quantities 
of  commodities  that  one  pound  of  gold  bullion  will 
procure,  and,  therefore,  the  proposition  to  authorize 
the  free  and  unlimited  coinage  of  silver  into  full  legal 
tender  money  at  the  ratio  of  16  to  1  means,  under 
existing  conditions,  that  the  intrinsic  value  of  the 
silver  dollar  shall  only  be  half,  or  about  half,  the  in- 
trinsic value  of  the  gold  dollar.  My  own  opinion  is 
tliat  after  we  had  passed  a  certain  limit  the  more  silver 
dollars  we  coined  the  less  they  would  be  worth,  be- 
cause the  inflation  itself  would  still  further  diminish 
their  purchasing  power.  Such  legislation  by  the  United 
States  alone  would  not  reduce  the  value  of  the  gold 
dollar  to  any  extent  whatever,  because,  as  already 
stated,  the  value  of  that  metal  in  commercial  transac- 
tions all  over  the  world  is  estimated  according  to  its 
weight  and  fineness,  and  will  continue  to  be  so  esti- 
mated, and  consequently  the  only  way  in  which  this 
country  alone  could  diminish  the  value  of  its  gold 
dollar  would  be  to  reduce  the  weight  of  the  pure  metal 
contained  in  it. 

THE   WORLD-WIDE   FAILURE    OF   RATIOS. 

he  attempt  to  coin  the  two  metals  without  limit 
as  to  amount  in  full  legal  tender  money  and  keep  both 
in  circulation  at  the  same  time  has  been  made  by 
nearly  every  civilized  nation  in  the  world  and  has 
failed  in  every  one  of  them.  It  has  failed  because  in 
every  instance  it  has  been  found  impossible  to  estab- 
lish and  maintain  a  legal  ratio  corresponding  at  all 
times  with  the  intrinsic  or  commercial  ratio  between 
the  two  metals  contained  in  the  coins,  and  because 


THE  MONEY    QUESTION.  91 

whenever  either  of  the  metals  was  undervalued  rela- 
tively to  the  other  in  the  coinage  laws  it  was  expelled 
from' the  country.  England  persisted  in  the  attempt 
for  nearly  five  hundred  years  and,  notwithstanding  the 
enactment  of  most  severe  penal  statutes  against  the 
exportation  of  coins  or  bullion,  was  at  last  forced  to 
abandon  the  efi'ort  and  adopt  the  single  standard. 
France,  in  her  efforts  to  keep  the  coins  of  the  two 
metals  in  circulation  at  the  same  time,  changed  the 
legal  ratio  between  them  more  than  one  hundred  and 
fifty  times  in  a  single  century,  and  finally,  in  1878, 
finding  that  gold  was  leaving  her  and  that  in  ten  years 
her  net  imports  of  silver  had  amounted  to  $280,000,000, 
stopped  the  coinage  of  legal  tender  silver,  and  for 
seventeen  years  the  attempt  has  been  abandoned  in 
that  country.     Many  other  nations  in  Europe  and  other 

f)arts  of  the  world  have  subjected  their  people  to  great 
OSS  and  expense  by  their  adherence  to  monetary  sys- 
tems based  upon  the  theory  that  a  double  standard 
could  be  maintained,  but  in  no  case  have  they  suc- 
ceeded in  keeping  the  coins  of  the  two  metals  in  use 
at  the  same  time,  except  for  very  short  periods.  Our 
own  country  is  not  without  experience  upon  this  sub- 
ject, and  the  results  here  were  just  the  same  as  they 
have  been  everywhere  else.  By  the  act  of  1792,  which 
was  our  first  coinage  law,  the  legal  ratio  between  gold 
and  silver  was  fixed  at  15  to  1,  when  in  fact  the  true 
commercial  ratio  was  or  soon  became  about  15^  to  1, 
and  the  result  of  this  very  small  overvaluation  of  silver 
in  the  coinage  was  that  gold  went  out  of  circulation 
and  we  had  practically  silver  monometallism  until 
after  the  passage  of  the  Act  of  1834.  For  the  purpose 
of  restoring  gold  to  the  circulation,  Congress  in  1834 
changed  the  ratio  from  15  to  1  to  16  to  1,  and  as  this 
was  an  overvaluation  of  gold  in  the  coinage,  silver  left 
the  country,  and  from  that  time  on  until  1878  we  had 
practically  gold  monometallism,  whenever  we  had  any 
metallic  basis  at  all  for  our  currency. 

It  would  be  a  useless  consumption  of  time  to  go 
into  a  detailed  account  of  the  monetary  legislation  of 
this  and  other  countries,  or  to  show  at  length  how  it 


92  .        THE  MONEY  QUESTION. 

affected  the  movements  and  use  of  the  two  metals  by 
its  repeated  failures  to  conform  the  legal  ratio  to  the 
actual  commercial  ratio  between  them.  The  great  and 
important  fact  conclusively  established  by  the  history 
of  that  legislation  and  its  eifects  upon  the  circulation 
of  the  coins  of  the  two  metals  is,  that  whenever  one  of 
them  is  overvalued  relatively  to  the  other  in  the  coin- 
age laws,  with  free  coinage  or  coinage  upon  equal 
terms,  and  both  are  made  legal  tender,  the  coins  of 
the  undervalued  metal  will  be  driven  out  of  circulation 
and  out  of  use  as  money  in  the  country  where  the  une- 
qual valuation  is  made.  The  reasons  for  this  are  per- 
fectly plain.  Both  being  legal  tenders,  the  least 
valuable  coins  will  always  be  used  in  making  pay- 
ments, and  will  become  the  measures  of  value  in  the 
exchange  of  commodities,  and  consequently  the  more 
valuable  coins  will  be  hoarded  or  sent  out  of  the 
country  into  a  market  w^here  their  real  value  will  be 
recognized.  Now,  as  this  is  just  what  has  always 
occurred — at  least  in  modern  times,  w^hen  commercial 
relations  between  different  countries  are  so  intimate 
and  the  means  of  transportation  are  so  rapid  and 
cheap — even  when  the  undervaluation  or  overvalua- 
tion amounted  to  only  one  or  two  per  cent.,  I  think  we 
are  fully  justified  in  concluding  that  if  the  United 
States  alone  should  adopt  the  policy  of  free  and  un- 
limited coinage  of  legal  tender  silver  at  the  ratio  of 
16  to  1,  which  would  be  an  overvaluation  of  that 
metal  to  the  amount  of  100  per  cent.,  all  the  gold  in 
the  country  would  be  immediately  hoarded  or  exported 
or  be  held  as  a  commodity  by  speculators  engaged  in 
the  business  of  buying  and  selling  it  at  a  premium. 
If  this  should  be  the  result,  the  free  coinage  of  silver 
would  not  for  a  long  time  add  anything  whatever,  even 
nominally,  to  our  stock  of  money ;  on  the  contrary,  the 
immediate  effect  of  such  a  policy  would  be  a  contrac- 
tion to  the  extent  of  fully  one-third  of  our  present 
volume  of  currency  by  the  expulsion  of  about  $625,- 
000,000  in  gold,  and  it  would  require  more  than  fifteen 
years  to  supply  its  place  with  silver  dollars,  even  if 
our  mints  coined  nothing  else. 


THE   MONEY    QUESTION.  93 

CONTRACTION,   FLUCTUATION    AND   DEPRECIATION. 

All  who  have  been  or  may  be  induced  to  give  their 
support  to  this  revolutionary  policy,  upon  the  assur- 
ance that  it  will  give  the  country  more  money  for  use 
in  the  transaction  of  business,  will  be  greatly  disap- 
pointed, for  they  will  find,  when  it  is  too  late,  that 
instead  of  having  more  money  they  will  have  less,  and 
that  it  will  be  depreciated  in  value  besides.  The  in- 
troduction into  the  currency  of  a  country  of  any  kind 
of  money  about  which  there  is  the  least  doubt  will 
always  operate  to  drive  out  the  same  amount,  or  about 
the  same  amount,  of  better  money,  and  thus  leave  the 
people  with  substantially  the  same  volume  of  currency 
they  had  at  the  beginning.  The  act  providing  for  the 
purchase  of  silver  bullion  and  the  issue  of  legal  tender 
Treasury  notes  in  payment  for  it  was  passed  on  the 
14th  day  of  July,  1890,  and  the  purchasing  clause  of 
that  act  was  repealed  November  J,  1893.  While  it 
remained  in  force,  United  States  Treasury  notes  were 
issued  to  the  amount  of  $  155.931,002,  and  there  were 
many  people  who  believed  that  this  was  making  a 
material  and  permanent  addition  to  the  volume  of  our 
currency ;  but  the  official  records  show  that  during  the 
same  time  the  net  exports  of  gold  from  this  country 
amounted  to  $103,419,491,  so  that  the  real  addition  to 
our  circulation  accomplished  by  the  issue  of  nearly 
$  160,000,000  of  new  notes  was  about  fifty-two  and  a 
half  million  dollars  during  a  period  of  more  than  three 
years.  The  mere  apprehension  that  the  government 
would  not  be  able  to  maintain  the  parity  of  the  two 
metals  under  the  policy  inaugurated  by  that  act  not 
only  discredited  the  new  Treasury  notes  themselves, 
but  the  whole  volume  of  our  currency,  and  gold  went 
out  about  as  fast  as  the  new  notes  came  in.  While, 
therefore,  it  is  not  at  all  certain  that  free  coinage  would 
ultimately  make  any  considerable  addition  to  our  cir- 
culation, it  is  absolutely  certain  that  it  would  give  u» 
a  depreciated  and  fluctuating  currency,  and  the  ques- 
tion is  whether  the  producers  of  cotton,  wheat,  corn, 
beef,   pork,   oil,   lard,   cheese,   and  other    exportable 


94  THE  MONEY    QUESTIOIC. 

articles  will  be  benefited  or  injured  by  such  a  result. 
It  is  an  axiom  in  trade  that  the  prices  of  exportable 
products  are  fixed  in  the  foreign  market  where  the  sur- 
plus is  sold,  and  are  fixed  in  the  currency  of  that 
country  according  to  the  nominal  value  there.  If  sold 
in  England,  for  illustration,  the  prices  are  fixed  and 
paid  in  pounds,  shillings  and  pence,  and  not  in  dollars 
and  cents,  and,  consequently,  it  makes  no  diiference  to 
the  foreign  purchaser  what  kind  of  currency  the  pro- 
ducer has  at  home.  The  character  or  value  of  the 
currency  in  use  in  the  producing  country  does  not  affect 
the  price  of  the  article  abroad  to  any  extent  whatever, 
for  the  purchaser  there  trades  in  his  own  market  and' 
uses  his  own  currency  in  measuring  values.  The 
establishment  of  a  silver  standard  here  could  not 
possibly  increase  the  price  of  cotton  or  wheat  or  any 
other  American  product  in  Liverpool,  London,  Paris, 
or  Berlin,  whatever  effect  it  might  have  upon  the 
nominal  price  in  1')is  country.  If  our  monetary  system 
were  so  ch.anged  liiat  it  would  require  tw^o  dollars  to 
purchase  here  the  same  quantify  of  commodities  that 
one  dollar  will  purchase  now,  it  v.'ould  not  affect  the 
value  or  purchasing  power  of  the  English  pound  sterl- 
ing, the  French  franc,  or  German  mark  in  the  least. 
The  only  effect  would,  be  that  the  exchange  would  be 
doubled,  and  the  pound  sterling  instead  of  being  worth 
$  4.866  in  our  currency,  as  it  is  now,  would  be  worth 
$  9.732,  and  when  our  people  wanted  to  make  a  re- 
mittance to  pay  a  debt  abroad  the3^  would  have  to  pay 
twice  as  much  in  our  money  for  the  same  number  of 
pounds  as  they  pay  now,  while  the  foreigner  who 
wanted  to  make  a  remittance  to  pay  a  debt  here  would 
pay  only  half  as  much  in  his  money  for  the  same  num- 
ber of  dollars  as  he  pays  now.  But  the  exchange 
would  be  in  a  constant  state  of  fluctuation,  just  as  it 
has  been  between  (xreat  Britain  and  India  on  account 
of  the  changes  in  the  prices  of  silver  from  day  to  day ; 
and  the  American  producer  would  ])e  compelled  to  pay 
for  the  risk  taken  on  account  of  the  fluctuations  by 
receiving  a  less  price  for  his  cotton,  wheat,  beef  and 
other  articles.     The  farmers  and  planters  do  not  export 


THE  MONEY   QUESTION.  95 

their  own  products,  but  they  sell  them  at  home  to 
somebody  else,  who  sends  them  abroad,  and  if  the  ex- 
change is  steady  and  the  money  in  which  he  is  to  pay 
for  the  products  has  a  fixed  value  relatively  to  tne 
money  in  use  in  the  country  where  he  expects  to  sell 
them,  the  purchaser  here  can  afford  to  pay  the  highest 
price  that  would  leave  him  a  reasonable  margin  of 
profit  in  view  of  the  conditions  existing  in  the  market 
abroad.  In  other  words,  he  has  to  incur  but  one  risk  — 
the  possible  fall  in  the  price  of  the  products  abroad ; 
but  if  the  currency  here  is  depreciated  and  fluctuating^ 
if  our  money  has  no  fixed  and  certain  value  relatively 
to  the  money  in  use  abroad  where  he  expects  to  sell 
the  products,  there  is  an  additional  risk  to  be  incurred 
which  will  have  great  influence  in  determining  the 
price  he  can  afford  to  pay  the  producer.  In  addition 
to  the  risk  of  a  fall  in  the  price  of  the  products  abroad 
he  must  incur  the  risk  of  a  rise  in  the  price  of  silver 
between  the  time  of  his  purchase  and  the  time  when 
he  receives  the  proceeds  of  his  sale,  for  if  silver  rises 
in  the  meantime  he  may  not  get  back  as  many  dollars 
as  he  paid  out.  The  producer  must  pay  for  both  of 
these  risks  by  receiving  a  smaller  price  lor  liis  com- 
modities, and  hence  his  prices  will  never  increase  in 
proportion  to  the  actual  depreciation  of  the  money  in 
which  they  are  paid.  To  illustrate  my  meaning,  when 
silver  is  worth  60  cents  per  ounce,  the  bullion  con- 
tained in  a  silver  dollar  is  worth  46.4  cents,  but  if  the 
price  of  silver  should  advance  to  62  cents  per  ounce 
the  value  of  the  bullion  contained  in  a  silver  dollar 
would  be  48  cents  —  an  increase  of  over  3  per  cent. 
Now,  the  price  of  cotton  or  wheat  will  not  rise  in  pro- 
portion to  the  depreciation  of  the  dollar  in  which  it  is 
to  be  paid ;  that  is,  the  purchaser  for  export  will  not 
pay  for  it  at  the  rate  of  46.4  cents  for  each  dollar  when 
bilver  is  worth  60  cents  an  ounce,  because  he  knows 
that  silver  may  rise  to  61  or  62  cents  per  ounce  before 
he  can  sell  the  product  abroad  and  get  his  money  for 
it,  and  he  knows  that  if  this  happens  the  gold  he  re- 
ceives abroad  can  not  be  exchanged  for  as  many  silver 
dollars  as  he  paid  the  producer  here.     He  will  not  take 


96  THE  MONEY   QUESTION. 

all  this  risk  upon  himself,  but  will  compel  tne  producer 
t6  bear  it  by  receiving  a  less  price  for  his  cotton  or 
wheat;  and  this  argument  applies  with  equal  force  to 
all  other  articles.  It  is  impossible  to  estimate  accur- 
ately the  amount  of  loss  which  this  would  inflict  upon 
the  American  producers  of  exportable  products,  but  it 
would  undoubtedly  be  very  great,  as  the  value  of  our 
exports  of  domestic  merchandise  is  nearly  $  870,000,000 
per  annum,  and  a  small  percentage  upon  this  large 
sum  would  very  materially  affect  the  incomes  of  our 
producers. 

THE   "  DEBTOR    CLASS  ''    ARGUMENT. 

It  is  argued  that  the  existing  standard  of  value 
ought  to  be  abandoned  because  since  1873  prices  of 
commodities  have  fallen,  and  will  continue  tc  fall,  if 
the  standard  is  maintained,  so  that  it  has  been,  and  will 
continue  to  be,  more  and  more  difficult  each  succeeding 
year  to  pay  debts;  that  this  fall  in  the  prices  of  all 
commodities  is  attributable  to  the  appreciation  of  gald, 
and  that  the  appreciation  in  the  value  of  gold  has  been 
caused  by  the  alleged  demonetization  of  silver  in  Ger- 
many in  1871  and  1873,  the  omission  of  the  standard 
silver  dollar  from  the  coinage  of  the  United  States  in 
1873,  and  the  suspension  of  the  coinage  of  silver  by 
France  in  1878.  It  is  true  that  the  prices  of  many 
things  have  fallen  since  1873,  but  it  is  true,  also  that 
the  prices  of  many  things  had  fallen  long  before  that 
date.  The  assertion  that  the  fall  in  prices  since.  1873 
is  due  to  the  appreciation  of  gold  alone  is  based  upon 
the  assumption  that  the  relations  between  supply  and 
demand  have  not  changed;  that  there  has  been  no  dimi- 
nution of  the  cost  of  production  and  distribution  ;  that 
the  facilities  for  effecting  financial  exchanges  have  not 
been  improved,  and,  in  brief,  that  the  world  has  made 
no  progress  in  the  conduct  of  its  industrial  and  com- 
mercial operations  for  more  than  twenty  years.  This 
assumption  is  so  inconsistent  with  well  known  economic 
and  historical  facts  that  it  seems  scarcely  worth  while 
to  give  it  a  serious  consideration.     Reductions  in  the 


THE  MONEY   QUESTION.  97 

prices  of  commodities  are  generally  due  to  so  many 
diiferent  causes  that  it  is  scarcely  ever  possible  to  as- 
certain the  extent  of  their  separate  influences.  I  pre- 
sume, however,  that  even  the  most  ardent  advocates  of 
free  coinage  would  be  willing  to  admit  that  the  inven- 
tion and  use  of  labor-saving  machinery,  the  extension 
of  our  railroad  systems, .the  improvement  of  our  water- 
ways, and  the  great  reductions  in  the  rates  for  carrying 
freight,  the  employment  of  steamships,  the  use  of  the 
telegraph  on  the  land  and  under  the  sea,  the  applica- 
tion of  electricity  in  the  production  of  light,  heal,  and 
power,  the  utilization  of  by-products  which  were  iorm- 
erly  wasted,  the  introduction  of  more  economical  meth- 
ods in  the  processes  of'  production,  the  wonderful 
advance  made  by  our  laborers  in  skill  and  efficiency, 
the  greatly  reduced  rates  of  interest  paid  for  the  use  of 
capital,  and  many  other  things  which  it  would  require 
much  time  to  enumerate  and  explain,  have  affected 
prices  in  some  measure,  at  least,  and  yet  they  ignore 
all  these  great  influences  in  their  argument  uponthe 
subject  and  attribute  the  lower  prices  of  commodities 
to  a  single  alleged  and  inadequate  cause  —  the  appreci- 
ation of  gold.  I  presume,  also,  that  our  free  coinage 
friends  will  admit  that  if  the  change  in  prices  has  been 
caused  entirely  by  the  appreciation  of  gold,  the  reduc- 
tion would  have  aff'ected  all  things  alike,  because  it  can 
not  be  denied,  that  in  the  absence  of  other  influences, 
gold  must  bear  the  same  relation  to  the  price  of  one 
article  that  it  bears  to  the  price  of  another.  But  we  do 
not  find  that  the  prices  of  all  things  have  been  reduced 
in  the  same  proportion,  nor  do  we  find  that  the  prices 
of  all  things  have  in  fact  been  reduced.  It  would  re- 
quire far  more  time  than  could  be  devoted  to  the  sub- 
ject upon  such  an  occasion  as  this  to  discuss  the  subject 
of  prices  in  all  its  details,  nor  is  it  necessary  to  do  so 
for  the  purpose  of  this  argument,  because  a  very  few 
illustrations  will  serve  to  show  the  weakness  of  the 
contention  that  the  decline  is  due  alone  to  the  appreci- 
ation of  gold. 


98  THE  MONEY   QUESTION. 


SOME  PACTS   CONCERNING  WAGES    AND    PRICES. 

In  1891,  1892,  and  part  of  1893  I  had  the  honor  to 
serve  on  a  sub-committee  charged  by  the  Senate  of  the 
United  States  with  the  duty  of  ascertaining  the  course 
of  prices  of  wages  of  labor  for  as  long  a  period  as  au- 
thentic records  would  enable  us  to  embrace  in  our  in- 
vestigation, and,  after  a  most  thorough  and  impartial 
examination  of  the  subject,  a  report  was  made  which 
fills  four  large  volumes  and  embodies  a  mass  of  infor- 
mation upon  these  subjects  which  can  not  be  found  in 
any  other  official  form.  As  to  the  course  of  prices  and 
wages  the  committee  was  unanimous,  though  there 
were  differences  of  opinion  among  the  members  as  to 
the  causes  that  had  from  time  to  time  produced  the 
changes.  The  prices  of  many  articles  and  the  wages  of 
labor  in  many  occupations  were  ascertained  during  each 
year  as  far  back  as  1840,  and  for  the  purposes  of  com- 
parison the  prices  of  commodities  and  the  wages  of  la- 
bor in  the  year  1860  were  adopted  as  the  standard. 
The  sufficiency  of  the  reasons  for  selecting  that  year 
rather  than  any  other  will  not,  I  think,  be  questioned. 
There  were  no  great  financial  or  other  disturbances 
during  that  year,  business  was  in  a  normal  condition  in 
all  parts  of  the  country,  no  changes  had  been  made  in 
the  monetary  systems  of  the  world  for  many  years,  the 
United  States  was  using  gold  as  the  measure  of  value, 
just  as  it  is  now,  except  that  there  was  no  legal  tender 
silver  in  circulation  as  there  is  now,  the  people  were 
prosperous  and  the  prices  of  commodities  and  the 
wages  of  labor  were  fairly  adjusted  with  relation  to  each- 
other.  At  the  time  when  the  investigation  w\as  made 
all  the  legislation  in  regard  to  silver  now  specifically 
complained  of  had  been  accomplished,  and  if  prices  or 
wages  had  fallen,  there  was  as  much  reason  to  attribute 
the  reduction  to  that  legislation  then  as  there  is  now. 
Ample  time  had  been  afforded  for  its  effects,  if  it  had 
any,  upon  prices  and  wages  to  be  felt,  and  the  fact  that 
the  investigation  was  not  made  for  the  purpose  of  influ- 
encing legislation  upon  the  silver  question  adds  to  the 
value  of  its  results. 


THE  MONEY    QUESTION.  99 

In  the  first  place,  the  committee  iiiianimously  selec- 
ted 232  articles  in  common  use  which  it  was  agreed 
constituted  the  great  bulk  of  the  consumption  and  ex- 
penditure of  the  people,  and  these  articles  were  sepa- 
rated into  eight  classes  or  groups ;  that  is,  clothes  and 
clothing,  fuel  and  lighting,  metals  and  implements, 
lumber,  and  house-building  materials,  drugs  and  chem- 
icals, house-furnishing  goods,  and  miscellaneous  com- 
modities. It  was  found  that  the  prices  of  articles  used 
for  food,  taking  them  altogether,  had  fallen  less  than  10 
per  cent,  since  1873,  while  the  prices  of  clothes  and 
clothing  had  fallen  32  per  cent. ;  fuel  and  light  nearly 
24  per  cent.;  metals  and  implements  35  per  cent. ; 
lumber  and  building  materials,  nearly  20  per  cent. ; 
drugs  and  chemicals,  31  per  cent. ;  house-furnishing 
goods,  27  per  cent. ;  and  miscellaneous  articles,  10  per 
cent.  The  prices  for  the  year  1860  being  taken  as  the 
standard,  were  represented  by  100,  and  increases  and 
decreases  were  shown  by  deviations  from  that  number 
up  or  down,  as  the  case  might  be.  The  investigation 
showed  that  at  the  time  it  was  made  articles  of  food 
stood  at  103.9,  or  nearly  4  per  cent,  higher  than  in  1860 ; 
clothes  and  clothing  at  81.1 ;  fuel  and  lighting  at  91 ; 
metals  and  implejnents  at  74.9,  lumber  and  house- 
building materials  at  122.3;  drugs  and  chemicals  at 
86.3;  house-furnishing  goods  at  70.1;  and  miscellan- 
eous articles  at  95.1.  These  results  of  the  investigation 
establish  three  facts  which  have  an  important  bearing 
upon  the  present  controversy.  The  first  fact  estab- 
lished is  that  the  present  prices  of  articles  of  food 
which  are  the  products  of  the  farms,  gardens,  orchards. 
and  dairies  of  the  country,  were  about  4  per  cent, 
higher  than  they  were  in  the  year  1860,  long  before  the 
silver  legislation  now  complained  of;  the  second  is, 
that  the  fall  in  the  prices  of  these  farm  products  since 
the  year  1873  has  been  much  less  than  the  fall  in  the 
prices  of  the  commodities  the  farmers  have  to  buy ; 
and  the  third  is,  that  the  reductions  in  prices  have  not 
been  uniform,  either  as  to  particular  articles  or  groups 
of  articles,  and  therefore  can  not  be  attributed  to  one 
and  the  same  cause  —  to  the  appreciation  of  gold  for 


100  THE  MONEY   QUESTION. 

instance.  The  conclusion  is  inevitable  that  various  in- 
fluences have  operated  to  produce  these  changes  in 
prices,  some  aifecting  one  group  of  articles  and  some 
another,  and  doubtless  some  affecting  all,  but  to  no  one 
influence  can  the  whole  result  be  attributed.  Cotton 
and  wheat  are  the  commodities  most  frequently  re- 
ferred to  by  those  who  contend  that  the  fall  in  prices 
is  due  to  the  appreciation  of  gold,  but  there  is  nothing 
whatever  in  the  methods  of  producing  those  articles,  or 
in  transporting  or  selling  them,  or  in  the  character  of 
the  money  received  for  them,  which  would  make  the 
appreciation  of  gold  affect  their  prices  more  than  it 
would  afiect  the  prices  of  other  commodities  produced 
by  our  people.  In  addition  to  the  various  causes 
which  have  more  or  less  affected  the  prices  of  all  arti- 
cles, the  prices  of  these  two  products  have  been  seri- 
ously affected  by  the  enormous  increase  in  their  pro- 
duction since  the  year  1872,  which  was  the  last  crop 
year  preceding  the  legislation  in  regard  to  silver.  The 
production  of  cotton  in  this  country  in  1872-73  was 
2,971,351  bales,  containing  an  average  of  439  pounds 
net  weight,  while  the  production  in  1893-91  was  7,549,- 
817  bales,  containing  an  average  of  474  pounds  net 
weight,  or  an  increase  of  nearly  200  per  cent,  in  this 
country  alone,  besides  the  great  increase  that  has  taken 
place  in  competing  countries  ;  and  in  1894-95  the  pro- 
duction here  was  much  larger,  being  nearly  10,000,000 
bales.  According:  to  the  statistics  of  the  Agricultural 
Department  the  production  of  wheat  in  this  countrv  in 
1872  was  249.997,100  bushels,  and  in  1894,  460,267^16 
'mshels,  or  nearly  twice  as  much,  and  there  has  also 
been  an  enormous  increase  of  production  in  competing 
■ountries.  But,  gentlemen,  notwithstanding  the  great 
increase  in  the  production  of  cotton  and  wheat,  here 
nid  in  other  countries,  and  the  consequent  decline  in 
rheir  prices,  a  given  quantity  of  either  of  them  will 
now  purchase  in  our  own  markets  and  in  the  markets 
abroad  a  larger  share  of  many  other  useful  commodi- 
ties than  it  would  have  purchased  in  1872  or  1873;  so 
that,  in  fact,  as  compared  with  many  other  things,  the 
values  of  cotton  and  wheat  have  appreciated. 


THE  MONEY    QUESTION.  lOl 

'  WAGES   INCKEASED. 

The  one  thing  which  has  been  less  affected  by  the 
changes  in  the  relation  between  supply  and  demand, 
by  improvements  in  the  methods  of  production  and 
distribution  and  by  the  other  influences  which  produce 
fluctuations  in  prices  of  commodities  generally,  is 
labor,  and  it  is  by  far  the  most  important  single  source 
of  income  possessed  by  our  people,  a  much  larger 
amount  being  expended  every  year  in  the  payment  of 
wages  than  for  any  other  one  purpose.  The  cost  of 
labor  in  the  manufacturing  and  mechanical  industries 
alone  during  the  census  year  1889  was  $  2,283,216,529, 
which  was  nearly  two  and  one-half  times  the  value  of 
all  the  wheat  and  cotton  produced  in  this  country ;  and 
if  we  add  to  this  the  amounts  paid  for  farm  labor,  for 
clerical  and  other  work  in  mercantile  establishments, 
for  domestic  service  and  for  work  on  railways  of  all 
kinds,  on  water  craft,  on  streets  and  other  improve- 
ments in  the  cities,  and  in  the  many  other  occupations 
which  give  employment  to  our  people,  we  would  have 
a  sum  almost,  if  not  quite,  equal  to  the  value  of  all  our 
agricultural  products.  It  is  evident,  therefore,  that  if 
the  alleged  depreciation  of  gold  alone  has  caused  a 
reduction  of  prices,  the  wages  of  laoor,  the  greatest 
commodity  in  the  market,  should  have  fallen  since 
1873;  but  exactly  the  reverse  is  true.  The  investiga 
tions  of  this  subject  by  the  sub-committee  covered  a 
period  of  fifty-two  years  and  embraced  all  the  occupa- 
tions in  which  our  people  were  engaged,  and  the  fact, 
unanimously  found,  was  that,  although  eighteen  years 
had  elapsed  since  the  silver  legislation,  the  wages  of 
labor  were  higher  than  in  1872  or  1873.  Wages  were 
found  to  be  nearly  61  per  cent,  higher  than  in  1860, 
which  was  thirteen  years  before  the  silver  legislation, 
and  more  than  eight  per  cent,  higher  than  in  1873, 
when  thai  legislation  was  adopted. 

ALTERNATING    MONOMETALLISM  —  REDUCTION     OP    REDEMP- 
TION   MONEY. 

The  argument  that  the  reduction  of  prices  is  due 
to  the  appreciation  of  gold  is  necessarily  based  upon 


102  THE  MONEY   QUESTION. 

the  further  assumptions  that  the  legislation  in  regard  to 
silver  has  produced  a  scarcity  of  redemption  or  metallic 
money  in  the  world,  and  that  prices  are  fixed  and  regu- 
lated by  the  amount  of  such  money  in  circulation,  or 
available  for  circulation.  Neither  of  these  assump- 
tions is  justified  by  the  facts.  The  most  exhaustive 
efforts  have  been  made  from  time  to  time  by  the 
Treasury  Department,  through  the  Director  of  the 
Mint,  by  careful  examinations  of  the  monetary  statis- 
tics of  other  countries,  by  correspondence  with  our 
diplomatic  and  consular  representatives  abroad  and 
with  foreign  financial  authorities,  and  otherwise,  to 
ascertain  the  actual  amount  of  gold  and  silver  used 
as  money  in  the  world,  and  the  result  shows  that  there 
is  now  more  gold  and  silver  in  the  aggregate,  and  more 
of  each  one  of  them,  in  use  as  full  legal  tender  money 
than  there  ever  was  at  any  other  time  in  the  history  of 
the  world.  The  gold  in  use  as  money  amounts  to 
$  3,965,900,000,  the  full  legal  tender  silver  amounts  tO' 
$3,435,800,000,  and  the  limited  legal  tender  silver 
amounts  to  $  619,900,000.  The  policy  of  maintaining^ 
or  rather  attempting  to  maintain,  the  so-called  double 
standard  never  succeeded  in  keeping  so  large  an 
amount  of  full  legal  tender  silver  in  circulation  in  the 
world  as  there  is  at  this  time,  and  one  of  the  principal 
reasons  for  this  is  that  the  effect  of  that  policy  was  to 
drive  first  the  coins  of  one  metal  and  then  the  coins  of 
the  other  into  the  coff'ers  of  the  hoarders  or  into  the 
melting  pots,  because  they  were  undervalued  in  the 
coinage  laws  and  would  not  remain  in  use  as  money. 

PER  CAPITA  ;  REGULATING  THE  CURRENCY  BY  THE  CENSUS 

RETURNS. 

I  attach  very  little  importance  to  the  per  capita 
argument,  because  the  amount  of  currency  required 
in  a  country  depends  mainly  upon  the  volume  of  busi- 
ness to  be  transacted  and  the  customs  of  the  people  in 
conducting  their  exchanges,  and  not  at  all  upon  the 
number  of  men,  women,  and  children  residing  in  it ; 
but,  as  there  are  a  great  many  who  believe  that  the 
circulation  should  be  regulated  by  the  census  returns, 


THE  MONEY   QUESTION.  i03 

it  may  be  worth  while  to  state  that  the  production  of 
gold  alone  in  1890  —  and  it  is  much  larger  now  —  was 
nearly  two  and  one-half  times  greater  than  the  average 
annual  production  of  gold  and  silver  both  during  the 
decade  which  closed  with  the  year  1800.  In  1800  the 
population  of  all  the  countries  in  Europe  and  America 
was  197,505,895,  and  the  production  of  gold  and  silver 
amounted  to  $24.49  for  every  hundred  inhabitants, 
while  in  1890  the  population  of  the  same  countries  was 
466,789,341,  and  the  production  of  gold  alone  was 
$118,849,000,  which  amounted  to  $25.46  for  every 
hundred  inhabitants,  or  ninety-five  cents  more  for 
each  hundred  people  than  was  furnished  by  both 
metals  during  each  year  in  the  former  decade.  In 
1894  the  population  of  these  countries  was  485,180,841, 
and  the  production  of  gold  alone  was  $157,228,000, 
being  $32.41  for  each  hundred  inhabitants,  or  $7.92 
more  for  each  hundred  people  than  the  total  of  both 
metals  during  the  last  decade  of  the  last  century.  If, 
therefore,  the  people  of  Europe  and  America  had  used 
as  money  all  the  gold  and  all  the  silver  annually  pro- 
duced in  the  world  one  hundred  years  ago,  they  would 
not  have  received  as  large  a  per  capita  addition  to 
their  stock  of  money  as  they  would  receive  now  by 
adding  the  gold  alone.  In  view  of  these  facts,  I  sub- 
mit that  the  silver  legislation  of  1871  and  1873,  and  in 
1878  has  not  diminished  the  world's  supply  of  metallic 
money  as  compared  with  former  times  and  prevented 
the  single  gold-standard  countries  from  making  as 
great  an  annual  addition  to  their  stock  of  metallic 
currency. 

Official  monetary  statistics  show  that  in  the  gold 
standard  countries  of  the  world  the  stocks  of  money 
are  much  larger  per  capita  than  in  the  silver  standard 
countries.  Taking  the  large  gold  standard  countries 
and  the  large  silver  standard  countries,  it  appears  that 
in  1894  the  stock  of  money  in  the  United  States  was 
over  $25  per  capita,  in  the  United  Kingdom  nearly 
$20,  and  in  Germany,  nearly  $19,  while  in  Mexico  the 
per  capita  was  $4.71.  in  Russia  nnd  Finland  $8.32.  and 
in  China  .*3.2().     The  'j<>]<]  ^^t«ndard  countries  use  large 


104  THE  MQ^EY    QUESTION. 

amounts  of  silver  as  money,  but  the  silver  standard 
countries  use  no  gold  as  money,  and  c^n  not  do  so  for 
the  reasons  1  have  already  endeavored  to  explain. 
But,  gentlemen,  for  the  reasons  already  stated,  the 
commercial  nations  of  the  world  do  not  now  require 
the  same  proportion  of  metallic  money  in  the  transac- 
tion of  their  business  that  they  required  a  few  centuries 
ago,  or  even  one  century  ago.  Credit  has  been  vastly 
extended  and  the  use  of  paper  in  the  form  of  notes, 
checks,  and  bills  has  almost  entirely  displaced  me- 
tallic money  in  the  daily  business  ol'  the  people,  and 
as  long  as  these  forms  of  credit  are  kept  equal  in  value 
to  tne  metallic  standard,  the  effect  upon  the  prices  of 
commodities  is  precisely  the  same  as  if  the  whole 
volume  of  circulation  consisted  of  standard  coin,  for, 
as  long  as  equality  in  their  value  can  be  maintained, 
the  paper  representatives  of  the  dollar  perform  exactly 
the  same  office  in  the  exchange  of  commodities  that 
gold  dollars  themselves  would  perform ;  but  if  this 
equality  is  destroyed,  the  paper  is  discredited,  its  pur- 
chasing power  is  diminished,  and  the  people  have  no 
longer  a  stable  measure  of  value. 

"  CHEAP   MONEY  "   FOR    DEBTORS,   INDIVIDUAL   AND 

CORPORATE. 

One  of  the  most  eifective  arguments  maae  by  the 
advocates  of  free  coinage,  in  some  parts  of  the  country 
at  least,  is  that  the  people  are  in  debt,  and  that  it  is 
the  duty  of  the  Government  to  relieve  them  by  such 
legislation  as  will  enable  them  to  procure  cheap  money 
for  the  purpose  of  discharging  their  obligations,  and  in 
support  of  this  argument  the  most  exaggerated  state- 
r-.cnts  are  made  as  to  the  depressed  and  suffering  con- 
dition of  our  farmers,  wage  earners,  and  other  produc- 
ing classes.  This  argument  concedes  that  under  the 
proposed  system  of  free  coinage  at  the  ratio  of  16  to  1 
all  the  various  kinds  of  currency  in  use  by  the  people, 
including  the  silver  dollar  itself,  would  be  worth  less 
than  it  is  now,  for,  of  course,  if  this  is  not  to  be  the 
result  money  w;ould  be  no  cheaper  than  it  is  now.  To 
assert  that  the  people  are  in  debt  is  simply  to  say  that 


THE  MONEY    QUESTION.  105 

they  have  traded  with  each  other  on  credit,  that  one 
part  of  our  fellow-citizens,  relying  upon  the  integrity 
and  financial  standing  of  their  neighbors  and  acquaint- 
ances, have  lent  them  money  on  time  and  sold  property 
to  them  without  demanding  immediate  payment  in 
cash,  and  that  in  this  way  they  have  enabled  many 
people  to  carry  on  a  useful  business  and  live  in  com- 
fortable homes  who  otherwise  could  not  have  doiie  so. 
If  it  is  a  crime  to  lend  money  to  a  man  who  wants  to 
borrow  it,  or  to  sell  property  on  credit  to  a  man  who 
wants  to  purchase  it  and  has  no  ready  money  to  pay  for 
it,  let  the  perpetrators  be  properly  punished,  but  let  us 
not  involve  the  whole  country  in  confusion  and  disaster 
and  immolate  the  innocent  and  guilty  alike  in  order  to 
punish  the  real  offenders.  If  our  people  are  in  debt 
they  owe  each  other,  and.  consequently,  about  as  many 
would  be  actually  injured  as  would  be  apparently 
benefited  by  scaling  the  obligations  down  to  a  silver 
standard.  The  indebtedness  of  the  farmers,  mechanics, 
and  other  laboring  classes  of  our  people,  although  large 
in  the  aggregate,  is  quite  small  in  comparison  with  the 
whole  indebtedness  of  the  great  railroad  and  manu- 
facturing corporations,  the  national  and  State  banks, 
savings  institutions,  trust  companies,  insurance  com- 
panies, building  associations,  and  other  organizations 
engaged  in  financial  and  commercial  enterprises.  These 
various  organizations  are  indebted  to  the  people  to  the 
extent  of  many  billions  of  dollars,  and  while  it  is  true 
that  many  of  the  people  are  also  indebted  to  them, 
their  debtors  and  creditors  are  not  the  same  persons, 
and,  therefore,  the  debts  can  not  be  set  off  against  each 
other  and  extinguished  in  that  way.  1  deny  that  there 
is  any  such  thing  as  a  distinct  ''  debtor  class  "  in  this 
country,  for,  while  nearly  every  one  owes  some  debts, 
large  or  small,  nearly  every  one  has  also  some  debts 
owing  to  him ;  in  other  words,  he  is  both  debtor  and 
creditor.  The  laboring  people,  as  a  general  rule,  owe 
very  little  at  any  one  time,  while  their  employers  are 
always  indebted  to  them,  because  wages  are  not  paid 
in  advance;  and  besides,  many  of  them  have  small 
deposits  in  savings  and  other  banks,  in  trust  companies, 


106  THE   MONEY    QUESTION. 

in  building  associations,  and  large  numbers  of  them 
have  their  lives  insured  for  the  benefit  of  their  wives 
and  children,  and  consequently-  they  are  creditors  of 
the  banks  and  the  insurance  companies.  The  savings 
bank  depositors  in  this  country  last  year  numbered 
4,777,687,  and  the  wives  and  children  of  the  depositors 
who  depended  upon  these  accumulated  earning  for 
future  support  doubtless  numbered  10,000,000  more. 
There  were  1,925,340  depositors  in  the  national  banks 
last  year,  and  1,724,077  of  them  had  deposits  of  less 
than  $  1,000  each,  while  State  and  private  banks  and 
loan  and  trust  companies  held  deposits  for  1,436,638 
people.  Our  life  insurance  companies,  to  say  nothing 
of  companies  insuring  property  against  loss  by  fire  and 
otherwise,  had  7,505,870  policies  outstanding  last  3^ear, 
upon  which  the  premiums  had  been  paid,  or  were  be- 
ing paid  by  the  people,  and  the  mutual  benefit  and 
assessment  companies  had  3,478,000  members.  The 
building  and  loan  associations  had  nearly  2,000,000 
members,  all  of  whom  had  paid  their  money  in  as 
required  by  the  rules  of  the  body  to  which  they  be- 
longed. Here,  then,  are  about  21,000,000  of  our  people^ 
generally  poor,  or,  at  least,  people  of  moderate  means, 
who  have  given  credit  to  these  great  corporations  and 
companies,  and,  in  my  opinion,  it  would  be  a  grievous 
wrong  to  adopt  any  policy  which  would  deprive  them 
of  the  legal  right  to  demand  and  receive  just  as  good 
money  as  they  parted  with  when  they  made  the  deposits 
in  the  banks  or  paid  the  premiums  on  their  insurance 
policies.  The  hard  earned  savings  of  the  poor  ought 
not  to  be  sacrificed  to  the  avarice  of  the  wealthy  mine 
owners  or  the  ambition  of  aspiring  politicians,  and  if 
the  people  who  have  a  substantial  interest  in  the  wel- 
fare of  the  country  and  a  just  appreciation  of  their 
responsibilities  as  citizens  will  exert  their  proper  influ- 
ence in  public  aff'airs  this  great  wrong  can  never  be 
perpetrated. 

BANKING   AND   CURRENCY  PROBLEMS.      OUR   HIGHEST  DUTY. 

Mr.  President,  but  little  remains  for  me  to  say  be- 
fore bringing  these  remarks  to  a  conclusion.     It  is  not 


THE  MONEY   QUESTION.  107 

my  purpose  to  discuss  upon  this  occasion  the  various 
propositions  which  have  been  made  from  time  to  time 
for  the  improvement  of  our  banking  system,  or  toi*  ihe 
retirement  of  United  States  notes,  because  the  ques- 
tions involved  in  them  are  so  important  and  so  large 
that  they  can  not  be  properly  considered  in  connection 
with  the  subject  to  which  my  time  has  been  devoted. 
We  have  an  abundance  of  money  in  this  country  for 
all  the  purposes  of  trade,  and  the  disturbances  and 
hard  times  of  1893  and  1894  were  not  caused  by  a 
scarcity  or  contraction  of  the  currency,  but  by  a  con- 
traction of  credit  resulting  from  a  loss  of  confidence  in 
the  stability  and  value  of  our  currency.  So  far  as  the 
mere  volume  of  our  currency  is  concerned,  we  had 
then  and  have  now  an  ample  supply  for  all  necessary 
purposes,  but  under  the  existing  system  it  is  not  prop- 
erly distributed  and  is  not  sufficiently  elastic  to  meet 
all  the  changing  requirements  of  business  at  different 
periods  of  the  year.  The  United  States  should  go 
entirely  out  of  the  banking  business  by  the  withdrawal 
of  its  arbitrary  and  compulsory  issues  of  notes  and 
afford  the  people  an  opportunity  to  supply  their  own 
currency  based  upon  their  own  means  and  credit,  thus 
enabling  every  community  to  utilize  its  own  resources 
when  necessary,  and  adjust  the  circulation  from  time 
to  time  to  the  actual  demands  of  legitimate  commerce. 
In  what  way  this  shall  be  accomplished  is  a  question 
which  has  already  engaged  the  serious  attention  of  the 
people  and  public  authorities,  and  it  will  no  doubt 
continue  to  be  investigated  and  discussed  until  a  plan 
is  formulated  which,  if  not  perfect,  will  at  least  have 
the  merit  of  being  a  great  improvement  upon  the 
existing  system.  In  the  meantime  our  highest  duty  is 
to  preserve  the  present  standard  of  value,  maintain 
the  parity  of  the  two  metals,  and  keep  all  the  money 
in  circulation  among  the  people,  whether  it  be  gold 
anid  silver  coins,  or  paper  based  upon  them,  equal  in 
purchasing  power,  so  that  no  discrimination  will  or  can 
be  made  between  those  who  receive  silver  or  paper  and 
those  who  receive  gold.  A  great  government  should 
do  nothing  to  discredit  its  own  obligations  or  diminish 


108  THE  MONEY   QUESTION. 

the  value  of  the  money  in  the  hands  of  its  citizens, 
nor  should  the  people  of  a  great  country  ever  consent 
to  the  adoption  of  a  policy,  through  experimental 
iinancial  legislation  or  otherwise,  which  would  vitiate 
the  obligations  of  their  contracts,  interrupt  the  regular 
course  of  their  business  and  destroy  the  foundations 
upon  which  their  industrial  and  commercial  systems 
liave  been  constructed.  The  spirit  of  conservatism  is 
still  strong  among  our  people,  and,  notwithstanding 
the  delusive  promises  and  selfish  appeals  that  are  now 
largely  intluencing  their  opinions  in  some  parts  of  the 
country,  the  truth  will  ultimately  prevail,  and  I  have 
no  doubt  of  the  result  when  the  time  for  final  action 
comes. 

Gentlemen,  I  thank  you  for  your  polite  attention 
and  for  the  opportunity  you  have  given  me  to  say 
something  on  this  great  subject  to  an  audience  of 
Southern  men.  We  are  all  Americans,  all  citizens  of 
the  same  great  Republic,  and  while  it  endures  the 
fortunes  of  the  North,  South,  East  and  West  will  be 
bound  indissolubly  together.  There  can  be  no  antago- 
nistic interests,  no  prosperity  in  one  section  at  the  ex 
pense  of  another;  but  we  must  all  stand  or  fall  to- 
gether. So  believing,  I  have  spoken  to  you  to-day 
without  reservation  or  exaggeration  in  behalf  of  that 
policy  which,  in  my  judgment,  will  most  certainly 
promote  the  welfare  and  preserve  the  credit  and  honor 
of  our  whole  country. 


What  Senator  Brice  says: 

Senate  Chamber, 
Washington,  D.  C,  August  30,  95. 
I  have  read  with  care  the  articles  of  Gen.  Beatty  in  reply 
to  '"Coin's  Financial  School."  They  are  terse  and  forcible, 
logical  and  clear.  Starting  with  sound  premises,  he  arrives  at 
conclusions  which  can  not  be  successfully  controverted.  They 
should  have  a  wide  circulation  and  thus  aid  greatly  in  the  dis- 
sipation of  the  untenable  views  which  are  now  being  circu- 
ated  in  pamphlet  and  book  form. 

Calvin  S.  Brice. 

Treasury  Department,  Office  of  the  Secretary, 
Washington,  D.  C,  August  28,  1895. 

Gen.  John  Beatty,  Columbus,  Ohio: 

My  Dear  Sir  —  I  have  read  the  advance  sheets  of  your 
reply  to  "Coin's  Financial  School"  with  much  interest,  and 
it  affords  me  pleasure  to  say  that,  in  my  opinion,  it  is  one  of 
the  best,  if  not  the  very  bast,  publications  yet  made  upon  the 
subject.  It  is  clear  and  accurate  in  its  statements  of  fact,  and 
logical  in  its  conclusions. 

Very  truly  yours, 

J.  G.  Carlisle. 


Columbus,  O.,  August  30,  1895. 

S.  K.  Donarin,  Esq.,  Columbus,  Ohio: 

Dear  Sir — I  have  just  iinished  reading  Gen.  John  Beatty's 
Answer  to  "Coin's  Financial  School."  It  is  one  of  the  clearest, 
strongest,  and  most  entertaining  pamphlets  that  has  appeared 
against  the  unlimited  free  coinage  of  silver  at  the  ratio  of  16 
to  1  by  this  government  alone.  Those  who  have  read  Mr. 
Harvey's  book  should  now  read  this  answer  to  it.  It  clears 
away  the  mistatements,  refutes  the  so-called  arguments,  and 
cuts  up  by  the  roots  the  appeals  to  the  prejudices  of  "Coin's 
Financial  School."  The  numerous  pertinent  facts  presented 
by  Geii.  Beatty  and  his  strong  common  sense  way  of  putting 
things  in  favor  of  sound  money,  makes  his  little  book  of  great 
value  at  this  time.  Very  truly  yours, 

Jos.    H.    OUTHWAITE. 


The  following  is  the  opinion  of  Gen.  Charles  H.  Grosvenor, 
member  of  Congress  from  Athens  district,  on  Gen.  Beatty's 
answer : 

Oakland,  August  28,  1895. 

"  It  is  far  and  away  the  best  thing  of  the  kind  that  has  so 
far  ajjpeared.  It  is  in  a  shape  to  be  read  and  understood,  and 
is  a  complete  reply  to  all  the  vagaries  of  'Coin's  Financial 
School.'  It  should  go  into  the  hands  of  every  intelligent 
voter."  Yours  truly, 

ClIAl{Li;S    II.    (iRO.SVENOR. 


PUBLISHED   BY 

S.  K.  DONAVIN,  COLUMBUS,  OHIO, 

AS   SECOND   CLASS   M-ATTER. 


UNIVERSITY  OF  CALIFORNIA  AT  LOS  ANGELES 

THE  UNIVERSITY  LIBRARY 
This  book  is  DUE  on  the  last  date  stamped  below 


1$  1943  i 


A 


jUN  3      19.- 
2  4 1953 

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